Exhibit 10.2
    

    

    



    
      

      

      

      CULP, INC.
    

    
      

      

      

      $11,000,000

______________

$11,000,000 8.01% Senior Notes
      due August 11, 2015

______________

NOTE PURCHASE
      AGREEMENT

_____________



Dated as of August 11, 2008




    

    

    



    
      
        

        

      

      
        

        

        
          


        

      

      
        

        

      

    

    
      Table of Contents
    

    
    	
          
            SECTION
          

        	
          Heading
        	
          Page
        
	

        	

        	
           
        
	

        	

        	
           
        
	
          
            SECTION 1.
          

        	
          Authorization of Notes
        	
          5
        
	

        	

        	
           
        
	

        	

        	
           
        
	
          
            SECTION 2.
          

        	
          Sale and Purchase of Notes
        	
          6
        
	

        	

        	
           
        
	

        	

        	
           
        
	
          
            SECTION 3.
          

        	
          Closing
        	
          6
        
	

        	

        	
           
        
	

        	

        	
           
        
	
          
            SECTION 4.
          

        	
          Conditions to Closing
        	
          6
        
	

        	

        	
           
        
	
          Section 4.1.
        	
          Representations and Warranties
        	
          6
        
	
          Section 4.2.
        	
          Performance; No Default
        	
          6
        
	
          Section 4.3.
        	
          Compliance Certificates
        	
          7
        
	
          Section 4.4.
        	
          Opinions of Counsel
        	
          7
        
	
          Section 4.5.
        	
          Purchase Permitted By Applicable Law, Etc.
        	
          7
        
	
          Section 4.6.
        	
          Sale of Other Notes
        	
          7
        
	
          Section 4.7.
        	
          Payment of Special Counsel Fees
        	
          7
        
	
          Section 4.8.
        	
          Private Placement Number
        	
          8
        
	
          Section 4.9.
        	
          Changes in Corporate Structure
        	
          8
        
	
          Section 4.10.
        	
          B&H Acquisition
        	
          8
        
	
          Section 4.11.
        	
          Funding Instructions
        	
          8
        
	
          Section 4.12.
        	
          Proceedings and Documents
        	
          8
        
	

        	

        	
           
        
	
          
            SECTION 5.
          

        	
          Representations and Warranties of the Company
        	
          8
        
	

        	

        	
           
        
	
          Section 5.1.
        	
          Organization; Power and Authority
        	
          8
        
	
          Section 5.2.
        	
          Authorization, Etc.
        	
          8
        
	
          Section 5.3.
        	
          Disclosure
        	
          9
        
	
          Section 5.4.
        	
          Organization and Ownership of Shares of Subsidiaries; Affiliates
        	
          9
        
	
          Section 5.5.
        	
          Financial Statements; Material Liabilities
        	
          10
        
	
          Section 5.6.
        	
          Compliance with Laws, Other Instruments, Etc.
        	
          10
        
	
          Section 5.7.
        	
          Governmental Authorizations, Etc.
        	
          10
        
	
          Section 5.8.
        	
          Litigation; Observance of Agreements, Statutes and Orders
        	
          10
        
	
          Section 5.9.
        	
          Taxes
        	
          11
        
	
          Section 5.10.
        	
          Title to Property; Leases
        	
          11
        
	
          Section 5.11.
        	
          Licenses, Permits, Etc.
        	
          11
        
	
          Section 5.12.
        	
          Compliance with ERISA
        	
          12
        
	
          Section 5.13.
        	
          Private Offering by the Company
        	
          12
        
	
          Section 5.14.
        	
          Use of Proceeds; Margin Regulations
        	
          13
        
	
          Section 5.15.
        	
          Existing Indebtedness; Future Liens
        	
          13
        
	
          Section 5.16.
        	
          Foreign Assets Control Regulations, Etc.
        	
          13
        
	
          Section 5.17.
        	
          Status under Certain Statutes
        	
          14
        
	
          Section 5.18.
        	
          Environmental Matters
        	
          14
        
	

        	

        	
           
        
	
          
            SECTION 6.
          

        	
          Representations of the Purchasers
        	
          14
        
	

        	

        	
           
        
	
          Section 6.1.
        	
          Purchase for Investment
        	
          14
        
	
          Section 6.2.
        	
          Source of Funds
        	
          15
        
	

        	

        	
           
        
	
          
            SECTION 7.
          

        	
          Information as to Company
        	
          16
        
	

        	

        	
           
        
	
          Section 7.1.
        	
          Financial and Business Information
        	
          16
        
	
          Section 7.2.
        	
          Officer’s Certificate
        	
          19
        


    

    
      
        

        

      

      
        
          2
        

        
          


        

      

      
        

        

      

    

    
    	
          Section 7.3.
        	
          Visitation
        	
          20
        
	

        	

        	
           
        
	
          
            SECTION 8.
          

        	
          Payment and Prepayment of the Notes
        	
          20
        
	

        	

        	
           
        
	
          
            Section 8.1.
          

        	
          Required Prepayments
        	
          21
        
	
          Section 8.2.
        	
          Change in Control
        	
          21
        
	
          Section 8.3.
        	
          Allocation of Partial Prepayments
        	
          22
        
	
          Section 8.4.
        	
          Optional Prepayments with Make-Whole Amount
        	
          23
        
	
          Section 8.5.
        	
          Maturity; Surrender, Etc.
        	
          23
        
	
          Section 8.6.
        	
          Purchase of Notes
        	
          24
        
	
          Section 8.7.
        	
          Make-Whole Amount
        	
          24
        
	

        	

        	
           
        
	
          
            SECTION 9.
          

        	
          Affirmative Covenants
        	
          25
        
	

        	

        	
           
        
	
          Section 9.1.
        	
          Compliance with Law
        	
          25
        
	
          Section 9.2.
        	
          Insurance
        	
          25
        
	
          Section 9.3.
        	
          Maintenance of Properties
        	
          26
        
	
          Section 9.4.
        	
          Payment of Taxes and Claims
        	
          26
        
	
          Section 9.5.
        	
          Corporate Existence, Etc.
        	
          26
        
	
          Section 9.6.
        	
          Notes to Rank Pari Passu
        	
          26
        
	
          Section 9.7.
        	
          Guaranty by Subsidiaries
        	
          26
        
	
          Section 9.8.
        	
          Books and Records
        	
          27
        
	
          Section 9.9.
        	
          B&H Acquisition
        	
          27
        
	

        	

        	
           
        
	
          
            SECTION 10.
          

        	
          Negative Covenants
        	
          27
        
	

        	

        	
           
        
	
          Section 10.1.
        	
          Tangible Net Worth
        	
          27
        
	
          Section 10.2.
        	
          Financial Ratios
        	
          27
        
	
          Section 10.3.
        	
          Liens
        	
          28
        
	
          Section 10.4.
        	
          Merger, Consolidation, Etc.
        	
          30
        
	
          Section 10.5.
        	
          Sale of Assets, etc.
        	
          30
        
	
          Section 10.6.
        	
          Transactions with Affiliates
        	
          31
        
	
          Section 10.7.
        	
          Sale and Lease-Back
        	
          31
        
	
          Section 10.8.
        	
          Sale or Discount of Receivables
        	
          31
        
	
          Section 10.9.
        	
          Change in Business
        	
          31
        
	
          Section 10.10.
        	
          Restrictive Agreements
        	
          31
        
	
          Section 10.11.
        	
          Terrorism Sanctions Regulations
        	
          32
        
	
          Section 10.12.
        	
          Liens and Reserves
        	
          32
        
	

        	

        	
           
        
	
          
            SECTION 11.
          

        	
          Events of Default
        	
          32
        
	

        	

        	
           
        
	

        	

        	
           
        
	
          
            SECTION 12.
          

        	
          Remedies on Default, Etc.
        	
          34
        
	

        	

        	
           
        
	
          Section 12.1.
        	
          Acceleration
        	
          34
        
	
          Section 12.2.
        	
          Other Remedies
        	
          35
        
	
          Section 12.3.
        	
          Rescission
        	
          35
        
	
          Section 12.4.
        	
          No Waivers or Election of Remedies, Expenses, Etc.
        	
          35
        


    

    
      
        

        

      

      
        
          3
        

        
          


        

      

      
        

        

      

    

    
    	
          SECTION 13.
        	
          REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES
        	
          32
        
	

        	

        	
           
        
	
          Section 13.1.
        	
          Registration of Notes
        	
          32
        
	
          Section 13.2.
        	
          Transfer and Exchange of Notes
        	
          32
        
	
          
            Section 13.3.
          

        	
          Replacement of Notes
        	
          33
        
	

        	

        	
           
        
	
          SECTION 14.
        	
          PAYMENTS ON NOTES
        	
          33
        
	

        	

        	
           
        
	
          Section 14.1.
        	
          Place of Payment
        	
          33
        
	
          Section 14.2.
        	
          Home Office Payment
        	
          34
        
	

        	

        	
           
        
	
          SECTION 15.
        	
          EXPENSES, ETC
        	
          34
        
	

        	

        	
           
        
	
          Section 15.1.
        	
          Transaction Expenses
        	
          34
        
	
          Section 15.2.
        	
          Survival
        	
          34
        
	

        	

        	
           
        
	
          SECTION 16.
        	
          SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT
        	
          35
        
	

        	

        	
           
        
	
          SECTION 17.
        	
          AMENDMENT AND WAIVER
        	
          35
        
	

        	

        	
           
        
	
          Section 17.1.
        	
          Requirements
        	
          35
        
	
          Section 17.2.
        	
          Solicitation of Holders of Notes
        	
          35
        
	
          Section 17.3.
        	
          Binding Effect, etc
        	
          36
        
	
          Section 17.4.
        	
          Notes Held by Company, etc
        	
          36
        
	

        	

        	
           
        
	
          SECTION 18.
        	
          NOTICES
        	
          36
        
	

        	

        	
           
        
	
          SECTION 19.
        	
          REPRODUCTION OF DOCUMENTS
        	
          37
        
	

        	

        	
           
        
	
          SECTION 20.
        	
          CONFIDENTIAL INFORMATION
        	
          37
        
	

        	

        	
           
        
	
          SECTION 21.
        	
          SUBSTITUTION OF PURCHASER
        	
          38
        
	

        	

        	
           
        
	
          SECTION 22.
        	
          MISCELLANEOUS
        	
          38
        
	

        	

        	
           
        
	
          Section 22.1.
        	
          Successors and Assigns
        	
          38
        
	
          Section 22.2.
        	
          Payments Due on Non-Business Days
        	
          39
        
	
          Section 22.3.
        	
          Accounting Terms
        	
          39
        
	
          
            Section 22.4.
          

        	
          Severability
        	
          39
        
	
          Section 22.5.
        	
          Construction, etc
        	
          39
        
	
          Section 22.6.
        	
          Counterparts
        	
          39
        
	
          Section 22.7.
        	
          Governing Law
        	
          39
        
	
          Section 22.8.
        	
          Jurisdiction and Process; Waiver of Jury Trial
        	
          40
        
	

        	

        	
           
        
	
          Signature
        	

        	
          1
        


    

    
      
        

        

      

      
        
          4
        

        
          


        

      

      
        

        

      

    

    
    	
          SCHEDULE A
        	
          —
        	
          INFORMATION RELATING TO PURCHASERS
        
	

        	

        	
           
        
	
          SCHEDULE B
        	
          —
        	
          DEFINED TERMS
        
	

        	

        	
           
        
	
          SCHEDULE 5.3
        	
          —
        	
          Disclosure Materials
        
	

        	

        	
           
        
	
          SCHEDULE 5.4
        	
          —
        	
          Subsidiaries of the Company and Ownership of Subsidiary Stock
        
	

        	

        	
           
        
	
          SCHEDULE 5.5
        	
          —
        	
          Financial Statements
        
	

        	

        	
           
        
	
          SCHEDULE 5.14
        	
          —
        	
          Use of Proceeds
        
	

        	

        	
           
        
	
          SCHEDULE 5.15
        	
          —
        	
          Existing Indebtedness
        
	

        	

        	
           
        
	
          EXHIBIT 1
        	
          —
        	
          Form of 8.01% Senior Note due August 11, 2015
        
	

        	

        	
           
        
	
          EXHIBIT 4.4(a)
        	
          —
        	
          Form of Opinion of Special Counsel for the Company
        
	

        	

        	
           
        
	
          EXHIBIT 4.4(b)
        	
          —
        	
          
            Form of Opinion of Special Counsel for the Purchasers
          

        


    

    
      

      CULP, INC.
101 South Main Street
High Point,
      North Carolina  27261-2686


8.01% Senior Notes
      due August 11, 2015
    

    
      August 11, 2008
    

    
      TO EACH OF THE PURCHASERS LISTED IN
          SCHEDULE A HERETO:
    

    
      Ladies and Gentlemen:
    

    
      Culp, Inc., a North Carolina corporation (the “Company”),
      agrees with each of the purchasers whose names appear at the end hereof
      (each, a “Purchaser” and, collectively, the “Purchasers”)
      as follows:
    

    
      SECTION 1.             AUTHORIZATION OF NOTES.
    

    
      The Company will authorize the issue and sale of $11,000,000 aggregate
      principal amount of its 8.01% Senior Notes due August 11, 2015 (the “Notes”,
      such term to include any such notes issued in substitution therefor
      pursuant to Section 13).  The Notes shall be substantially in the form
      set out in Exhibit 1.  Certain capitalized and other terms used in this
      Agreement are defined in Schedule B; and references to a “Schedule” or
      an “Exhibit” are, unless otherwise specified, to a Schedule or an
      Exhibit attached to this Agreement.
    

    
      
        

        

      

      
        
          5
        

        
          


        

      

      
        

        

      

    

    

    

    
      SECTION 2.             SALE AND PURCHASE OF NOTES.
    

    
      Subject to the terms and conditions of this Agreement, the Company will
      issue and sell to each Purchaser and each Purchaser will purchase from
      the Company, at the Closing provided for in Section 3, Notes in the
      principal amount specified opposite such Purchaser’s name in Schedule A
      at the purchase price of 100% of the principal amount thereof.  The
      Purchasers’ obligations hereunder are several and not joint obligations
      and no Purchaser shall have any liability to any Person for the
      performance or non-performance of any obligation by any other Purchaser
      hereunder.
    

    
      SECTION 3.             CLOSING.
    

    
      The sale and purchase of the Notes to be purchased by each Purchaser
      shall occur at the offices of Chapman and Cutler LLP, 111 West Monroe
      Street, Chicago, Illinois 60603, at 10:00 a.m., Chicago time, at a
      closing (the “Closing”) on August 11, 2008 or on such
      other Business Day thereafter on or prior to August 22, 2008 as may be
      agreed upon by the Company and the Purchasers.  At the Closing the
      Company will deliver to each Purchaser the Notes to be purchased by such
      Purchaser in the form of a single Note (or such greater number of Notes
      in denominations of at least $100,000 as such Purchaser may request)
      dated the date of the Closing and registered in such Purchaser’s name
      (or in the name of its nominee), against delivery by such Purchaser to
      the Company or its order of immediately available funds in the amount of
      the purchase price therefor by wire transfer of immediately available
      funds for the account of the Company to account number 2040230014183 at
      Wachovia Bank, National Association, ABA Number 053000219, High Point,
      North Carolina.  If at the Closing the Company shall fail to tender such
      Notes to any Purchaser as provided above in this Section 3, or any of
      the conditions specified in Section 4 shall not have been fulfilled to
      such Purchaser’s satisfaction, such Purchaser shall, at its election, be
      relieved of all further obligations under this Agreement, without
      thereby waiving any rights such Purchaser may have by reason of such
      failure or such nonfulfillment.
    

    
      SECTION 4.             CONDITIONS TO CLOSING.
    

    
      Each Purchaser’s obligation to purchase and pay for the Notes to be sold
      to such Purchaser at the Closing is subject to the fulfillment to such
      Purchaser’s satisfaction, prior to or at the Closing, of the following
      conditions:
    

    
      Section 4.1. Representations and Warranties.  The
      representations and warranties of the Company in this Agreement shall be
      correct when made and at the time of the Closing.
    

    
      Section 4.2. Performance; No Default.  The
      Company shall have performed and complied with all agreements and
      conditions contained in this Agreement required to be performed or
      complied with by it prior to or at the Closing and after giving effect
      to the issue and sale of the Notes (and the application of the proceeds
      thereof as contemplated by Section 5.14) no Default or Event of Default
      shall have occurred and be continuing.  Neither the Company nor any
      Subsidiary shall have entered into any transaction since April 27, 2008
      that would have been prohibited by Section 10 hereof had such Section
      applied since such date.
    

    
      
        

        

      

      
        
          6
        

        
          


        

      

      
        

        

      

    

    

    

    
         Section 4.3. Compliance Certificates.
    

    
         (a)  Officer’s Certificate.  The
      Company shall have delivered to such Purchaser an Officer’s Certificate,
      dated the date of the Closing, certifying that the conditions specified
      in Sections 4.1, 4.2, 4.9 and 4.10 have been fulfilled.
    

    
         (b) Secretary’s Certificate.  The Company
      shall have delivered to such Purchaser a certificate of its Secretary or
      Assistant Secretary, dated the date of Closing, certifying as to the
      resolutions attached thereto and other corporate proceedings relating to
      the authorization, execution and delivery of the Notes and this
      Agreement.
    

    
         Section 4.4. Opinions of Counsel.  Such
      Purchaser shall have received opinions in form and substance
      satisfactory to such Purchaser, dated the date of the Closing (a) from
      Robinson, Bradshaw & Hinson, P.A., special counsel for the Company,
      covering the matters set forth in Exhibit 4.4(a) and covering such other
      matters incident to the transactions contemplated hereby as such
      Purchaser or its counsel may reasonably request (and the Company hereby
      instructs its counsel to deliver such opinion to the Purchasers) and
      (b) from Chapman and Cutler LLP, the Purchasers’ special counsel in
      connection with such transactions, substantially in the form set forth
      in Exhibit 4.4(b) and covering such other matters incident to such
      transactions as such Purchaser may reasonably request.
    

    
         Section 4.5. Purchase Permitted By Applicable Law, Etc.  On
      the date of the Closing such Purchaser’s purchase of Notes shall (a) be
      permitted by the laws and regulations of each jurisdiction to which such
      Purchaser is subject, without recourse to provisions (such as
      section 1405(a)(8) of the New York Insurance Law) permitting limited
      investments by insurance companies without restriction as to the
      character of the particular investment, (b) not violate any applicable
      law or regulation (including, without limitation, Regulation T, U or X
      of the Board of Governors of the Federal Reserve System) and (c) not
      subject such Purchaser to any tax, penalty or liability under or
      pursuant to any applicable law or regulation, which law or regulation
      was not in effect on the date hereof.  If requested by such Purchaser,
      such Purchaser shall have received an Officer’s Certificate certifying
      as to such matters of fact as such Purchaser may reasonably specify to
      enable such Purchaser to determine whether such purchase is so permitted.
    

    
         Section 4.6. Sale of Other Notes.  Contemporaneously
      with the Closing the Company shall sell to each other Purchaser and each
      other Purchaser shall purchase the Notes to be purchased by it at the
      Closing as specified in Schedule A.
    

    
        Section 4.7. Payment of Special Counsel Fees.
      Without limiting the provisions of Section 15.1, the Company shall have
      paid on or before the Closing the fees, charges and disbursements of the
      Purchasers’ special counsel referred to in Section 4.4 to the extent
      reflected in a statement of such counsel rendered to the Company at
      least one Business Day prior to the Closing.
    

    
      
        

        

      

      
        
          7
        

        
          


        

      

      
        

        

      

    

    
        Section 4.8. Private Placement Number.  A
      Private Placement Number issued by Standard & Poor’s CUSIP Service
      Bureau (in cooperation with the SVO) shall have been obtained for the
      Notes.
    

    
                      Section 4.9. Changes in Corporate Structure.  The
      Company shall not have changed its jurisdiction of incorporation or been
      a party to any merger or consolidation and shall not have succeeded to
      all or any substantial part of the liabilities of any other entity, at
      any time following the date of the most recent financial statements
      referred to in Schedule 5.5.  
    

    
                      Section 4.10. B&H Acquisition.  The
      Company shall have delivered to such Purchaser a true, complete and
      correct copy of the fully executed Purchase Agreement and all conditions
      necessary to close the B&H Acquisition (other than payment of the
      purchase price) shall have been satisfied in the manner contemplated
      therein.
    

    
                      Section 4.11. Funding Instructions.  At
      least three Business Days prior to the date of the Closing, each
      Purchaser shall have received written instructions signed by a
      Responsible Officer on letterhead of the Company confirming the
      information specified in Section 3 including (i) the name and address of
      the transferee bank, (ii) such transferee bank’s ABA number and
      (iii) the account name and number into which the purchase price for the
      Notes is to be deposited.
    

    
                      Section 4.12. Proceedings and Documents.  All
      corporate and other proceedings in connection with the transactions
      contemplated by this Agreement and all documents and instruments
      incident to such transactions shall be satisfactory to such Purchaser
      and its special counsel, and such Purchaser and its special counsel
      shall have received all such counterpart originals or certified or other
      copies of such documents as such Purchaser or such special counsel may
      reasonably request.
    

    
      SECTION 5.             REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
    

    
      The Company represents and warrants to each Purchaser that:
    

    
                      Section 5.1. Organization; Power and Authority.  The
      Company is a corporation duly organized, validly existing and in good
      standing under the laws of its jurisdiction of incorporation, and is
      duly qualified as a foreign corporation and is in good standing in each
      jurisdiction in which such qualification is required by law, other than
      those jurisdictions as to which the failure to be so qualified or in
      good standing could not, individually or in the aggregate, reasonably be
      expected to have a Material Adverse Effect.  The Company has the
      corporate power and authority to own or hold under lease the properties
      it purports to own or hold under lease, to transact the business it
      transacts and proposes to transact, to execute and deliver this
      Agreement and the Notes and to perform the provisions hereof and thereof.
    

    
                      Section 5.2. Authorization, Etc.  This
      Agreement and the Notes have been duly authorized by all necessary
      corporate action on the part of the Company, and this Agreement
      constitutes, and upon execution and delivery thereof each Note will
      constitute, a legal, valid and binding obligation of the Company
      enforceable against the Company in accordance with its terms, except as
      such enforceability may be limited by (i) applicable bankruptcy,
      insolvency, reorganization, moratorium or other similar laws affecting
      the enforcement of creditors’ rights generally and (ii) general
      principles of equity (regardless of whether such enforceability is
      considered in a proceeding in equity or at law).
    

    
      
        

        

      

      
        
          8
        

        
          


        

      

      
        

        

      

    

    
                      Section 5.3. Disclosure.  The
      Company has delivered to each Purchaser a copy of each of the items
      listed on Schedule 5.3 hereto (the “Offering Materials”)
      relating to the transactions contemplated hereby.  The Offering
      Materials fairly describe, in all material respects, the general nature
      of the business and principal properties of the Company and its
      Subsidiaries.  This Agreement, the Offering Materials and the documents,
      certificates or other writings delivered to the Purchasers by or on
      behalf of the Company in connection with the transactions contemplated
      hereby and identified in Schedule 5.3, and the financial statements
      listed in Schedule 5.5 (this Agreement, the Offering Materials and such
      documents, certificates or other writings and such financial statements
      delivered to each Purchaser prior to July 3, 2008 being referred to,
      collectively, as the “Disclosure Documents”), taken
      as a whole, do not contain any untrue statement of a material fact or
      omit to state any material fact necessary to make the statements therein
      not misleading in light of the circumstances under which they were
      made.  Except as disclosed in the Disclosure Documents, since April 27,
      2008, there has been no change in the financial condition, operations,
      business, properties or prospects of the Company or any Subsidiary
      except changes that individually or in the aggregate could not
      reasonably be expected to have a Material Adverse Effect.  There is no
      fact known to the Company that could reasonably be expected to have a
      Material Adverse Effect that has not been set forth herein or in the
      Disclosure Documents.
    

    
                      Section 5.4. Organization and Ownership of Shares of
      Subsidiaries; Affiliates.  (a) Schedule 5.4 contains (except as
      noted therein) complete and correct lists (i) of the Company’s
      Subsidiaries, showing, as to each Subsidiary, the correct name thereof,
      the jurisdiction of its organization, and the percentage of shares of
      each class of its capital stock or similar equity interests outstanding
      owned by the Company and each other Subsidiary, (ii) of the Company’s
      Affiliates, other than Subsidiaries, and (iii) of the Company’s
      directors and senior officers.
    

    
        (b) All of the outstanding shares of capital stock or similar equity
      interests of each Subsidiary shown in Schedule 5.4 as being owned by the
      Company and its Subsidiaries have been validly issued, are fully paid
      and nonassessable and are owned by the Company or another Subsidiary
      free and clear of any Lien (except as otherwise disclosed in Schedule
      5.4).
    

    
        (c)  Each Subsidiary identified in Schedule 5.4 is a corporation or
      other legal entity duly organized, validly existing and in good standing
      under the laws of its jurisdiction of organization, and is duly
      qualified as a foreign corporation or other legal entity and is in good
      standing in each jurisdiction in which such qualification is required by
      law, other than those jurisdictions as to which the failure to be so
      qualified or in good standing could not, individually or in the
      aggregate, reasonably be expected to have a Material Adverse
      Effect.  Each such Subsidiary has the corporate or other power and
      authority to own or hold under lease the properties it purports to own
      or hold under lease and to transact the business it transacts and
      proposes to transact.
    

    
      
        

        

      

      
        
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          (d)    No Subsidiary is a party to, or otherwise subject to any
      legal, regulatory, contractual or other restriction (other than this
      Agreement, the agreements or other restrictions listed on Schedule 5.4
      and customary limitations imposed by corporate law or similar statutes)
      restricting the ability of such Subsidiary to pay dividends out of
      profits or make any other similar distributions of profits to the
      Company or any of its Subsidiaries that owns outstanding shares of
      capital stock or similar equity interests of such Subsidiary.
    

    
                      Section 5.5. Financial Statements; Material
      Liabilities.  The Company has delivered to each Purchaser copies of
      the financial statements of the Company and its Subsidiaries listed on
      Schedule 5.5.  All of said financial statements (including in each case
      the related schedules and notes) fairly present in all material respects
      the consolidated financial position of the Company and its Subsidiaries
      as of the respective dates specified in such Schedule and the
      consolidated results of their operations and cash flows for the
      respective periods so specified and have been prepared in accordance
      with GAAP consistently applied throughout the periods involved except as
      set forth in the notes thereto (subject, in the case of any interim
      financial statements, to normal year-end adjustments).   The Company and
      its Subsidiaries do not have any Material liabilities that are not
      disclosed on such financial statements or otherwise disclosed in the
      Disclosure Documents.
    

    
                      Section 5.6. Compliance with Laws, Other Instruments,
      Etc.  The execution, delivery and performance by the Company of this
      Agreement and the Notes will not (i) contravene, result in any breach
      of, or constitute a default under, or result in the creation of any Lien
      in respect of any property of the Company or any Subsidiary under, any
      indenture, mortgage, deed of trust, loan, purchase or credit agreement,
      lease, corporate charter or by-laws, or any other agreement or
      instrument to which the Company or any Subsidiary is bound or by which
      the Company or any Subsidiary or any of their respective properties may
      be bound or affected, (ii) conflict with or result in a breach of any of
      the terms, conditions or provisions of any order, judgment, decree, or
      ruling of any court, arbitrator or Governmental Authority applicable to
      the Company or any Subsidiary or (iii) violate any provision of any
      statute or other rule or regulation of any Governmental Authority
      applicable to the Company or any Subsidiary.
    

    
                      Section 5.7. Governmental Authorizations, Etc.  No
      consent, approval or authorization of, or registration, filing or
      declaration with, any Governmental Authority is required in connection
      with the execution, delivery or performance by the Company of this
      Agreement or the Notes.
    

    
                      Section 5.8. Litigation; Observance of Agreements,
      Statutes and Orders.  (a) There are no actions, suits,
      investigations or proceedings pending or, to the knowledge of the
      Company, threatened against or affecting the Company or any Subsidiary
      or any property of the Company or any Subsidiary in any court or before
      any arbitrator of any kind or before or by any Governmental Authority
      that, individually or in the aggregate, would reasonably be expected to
      have a Material Adverse Effect.
    

    
      
        

        

      

      
        
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         (b) Neither the Company nor any Subsidiary is in default under any
      term of any agreement or instrument to which it is a party or by which
      it is bound, or any order, judgment, decree or ruling of any court,
      arbitrator or Governmental Authority or is in violation of any
      applicable law, ordinance, rule or regulation (including without
      limitation Environmental Laws or the USA Patriot Act) of any
      Governmental Authority, which default or violation, individually or in
      the aggregate, could reasonably be expected to have a Material Adverse
      Effect.
    

    
                     Section 5.9. Taxes.  The
      Company and its Subsidiaries have filed all material tax returns that
      are required to have been filed in any jurisdiction, or have properly
      filed for extensions of time for the filing thereof, and have paid all
      taxes shown to be due and payable on such returns and all other taxes
      and assessments levied upon them or their properties, assets, income or
      franchises, to the extent such taxes and assessments have become due and
      payable and before they have become delinquent, except for any taxes and
      assessments (i) the amount of which is not individually or in the
      aggregate Material or (ii) the amount, applicability or validity of
      which is currently being contested in good faith by appropriate
      proceedings and with respect to which the Company or a Subsidiary, as
      the case may be, has established adequate reserves in accordance with
      GAAP.  The Company knows of no basis for any other tax or assessment
      that could reasonably be expected to have a Material Adverse
      Effect.  The charges, accruals and reserves on the books of the Company
      and its Subsidiaries in respect of Federal, state or other taxes for all
      fiscal periods are adequate.  The Federal income tax liabilities of the
      Company and its Subsidiaries have been finally determined (whether by
      reason of completed audits or the statute of limitations having run) for
      all fiscal years up to and including the fiscal year ended April 29,
      2001.
    

    
                      Section 5.10. Title to Property; Leases.  The
      Company and its Subsidiaries have good and sufficient title to their
      respective properties that individually or in the aggregate are
      Material, including all such properties reflected in the most recent
      audited balance sheet referred to in Section 5.5 or purported to have
      been acquired by the Company or any Subsidiary after said date (except
      as sold or otherwise disposed of in the ordinary course of business), in
      each case free and clear of Liens prohibited by this Agreement.  All
      leases that individually or in the aggregate are Material are valid and
      subsisting and are in full force and effect in all material respects.
    

    
                      Section 5.11. Licenses, Permits, Etc.  (a) The
      Company and its Subsidiaries own or possess all licenses, permits,
      franchises, authorizations, patents, copyrights, proprietary software,
      service marks, trademarks and trade names, or rights thereto, that
      individually or in the aggregate are Material, without known conflict
      with the rights of others.
    

    
         (b)To the best knowledge of the Company, no product of the Company or
      any of its Subsidiaries infringes in any material respect any license,
      permit, franchise, authorization, patent, copyright, proprietary
      software, service mark, trademark, trade name or other right owned by
      any other Person.
    

    
          (c)To the best knowledge of the Company, there is no Material
      violation by any Person of any right of the Company or any of its
      Subsidiaries with respect to any patent, copyright, proprietary
      software, service mark, trademark, trade name or other right owned or
      used by the Company or any of its Subsidiaries.
    

    
      
        

        

      

      
        
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                     Section 5.12.Compliance with ERISA.  (a)  The
      Company and each ERISA Affiliate have operated and administered each
      Plan in compliance with all applicable laws except for such instances of
      noncompliance as have not resulted in and could not reasonably be
      expected to result in a Material Adverse Effect.  Neither the Company
      nor any ERISA Affiliate has incurred any liability pursuant to Title I
      or IV of ERISA or the penalty or excise tax provisions of the Code
      relating to employee benefit plans (as defined in section 3 of ERISA),
      and no event, transaction or condition has occurred or exists that could
      reasonably be expected to result in the incurrence of any such liability
      by the Company or any ERISA Affiliate, or in the imposition of any Lien
      on any of the rights, properties or assets of the Company or any ERISA
      Affiliate, in either case pursuant to Title I or IV of ERISA or to such
      penalty or excise tax provisions or to section 401(a)(29) or 412 of the
      Code or section 4068 of ERISA, other than such liabilities or Liens as
      would not be individually or in the aggregate Material.
    

    
                     (b) The present value of the aggregate benefit
      liabilities under each of the Plans (other than Multiemployer Plans),
      determined as of the end of such Plan’s most recently ended plan year on
      the basis of the actuarial assumptions specified for funding purposes in
      such Plan’s most recent actuarial valuation report, did not exceed the
      aggregate current value of the assets of such Plan allocable to such
      benefit liabilities.  The term “benefit liabilities”
      has the meaning specified in section 4001 of ERISA and the terms “current
      value” and “present value” have the meaning
      specified in section 3 of ERISA.
    

    
                     (c) The Company and its ERISA Affiliates have not
      incurred withdrawal liabilities (and are not subject to contingent
      withdrawal liabilities) under section 4201 or 4204 of ERISA in respect
      of Multiemployer Plans that individually or in the aggregate are
      Material.
    

    
                     (d) The expected postretirement benefit obligation
      (determined as of the last day of the Company’s most recently ended
      fiscal year in accordance with Financial Accounting Standards Board
      Statement No. 106, without regard to liabilities attributable to
      continuation coverage mandated by section 4980B of the Code) of the
      Company and its Subsidiaries is not Material.
    

    
                     (e) The execution and delivery of this Agreement and the
      issuance and sale of the Notes hereunder will not involve any
      transaction that is subject to the prohibitions of section 406 of ERISA
      or in connection with which a tax could be imposed pursuant to
      section 4975(c)(1)(A)-(D) of the Code.  The representation by the
      Company to each Purchaser in the first sentence of this Section 5.12(e)
      is made in reliance upon and subject to the accuracy of such Purchaser’s
      representation in Section 6.2 as to the sources of the funds used to pay
      the purchase price of the Notes to be purchased by such Purchaser.
    

    
                     Section 5.13. Private Offering by the Company.  Neither
      the Company nor anyone acting on its behalf has offered the Notes or any
      similar securities for sale to, or solicited any offer to buy any of the
      same from, or otherwise approached or negotiated in respect thereof
      with, any person other than the Purchasers and not more than five (5)
      other Institutional Investors, each of which has been offered the Notes
      at a private sale for investment.  Neither the Company nor anyone acting
      on its behalf has taken, or will take, any action that would subject the
      issuance or sale of the Notes to the registration requirements of
      Section 5 of the Securities Act or to the registration requirements of
      any securities or blue sky laws of any applicable jurisdiction.
    

    
      
        

        

      

      
        
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                      Section 5.14. Use of Proceeds; Margin Regulations.  The
      Company will apply the proceeds of the sale of the Notes as set forth in
      Schedule 5.14.  No part of the proceeds from the sale of the Notes
      hereunder will be used, directly or indirectly, for the purpose of
      buying or carrying any margin stock within the meaning of Regulation U
      of the Board of Governors of the Federal Reserve System (12 CFR 221), or
      for the purpose of buying or carrying or trading in any securities under
      such circumstances as to involve the Company in a violation of
      Regulation X of said Board (12 CFR 224) or to involve any broker or
      dealer in a violation of Regulation T of said Board (12 CFR
      220).  Neither the Company nor any Subsidiary presently owns, legally or
      beneficially, or has any present intention to, acquire any margin
      stock.  As used in this Section, the terms “margin stock”
      and “purpose of buying or carrying” shall have the
      meanings assigned to them in said Regulation U.
    

    
                     Section 5.15. Existing Indebtedness; Future Liens
      .  (a) Except as described therein, Schedule 5.15 sets forth a
      complete and correct list of all outstanding Indebtedness of the Company
      and its Subsidiaries as of July 15, 2008 (including a description of the
      obligors and obligees, principal amount outstanding and collateral
      therefor, if any, and Guaranty thereof, if any) excluding Indebtedness
      having an unpaid aggregate principal amount of less than $50,000 as of
      July 15, 2008, since which date there has been no Material change in the
      amounts, interest rates, sinking funds, installment payments or
      maturities of the Indebtedness of the Company or its
      Subsidiaries.  Neither the Company nor any Subsidiary is in default and
      no waiver of default is currently in effect, in the payment of any
      principal or interest on any Indebtedness of the Company or such
      Subsidiary and no event or condition exists with respect to any
      Indebtedness of the Company or any Subsidiary that would permit (or that
      with notice or the lapse of time, or both, would permit) one or more
      Persons to cause such Indebtedness to become due and payable before its
      stated maturity or before its regularly scheduled dates of payment.
    

    
                    (b) Except as disclosed in Schedule 5.15, neither the
      Company nor any Subsidiary has agreed or consented to cause or permit in
      the future (upon the happening of a contingency or otherwise) any of its
      property, whether now owned or hereafter acquired, to be subject to a
      Lien not permitted by Section 10.3.
    

    
                    (c) Neither the Company nor any Subsidiary is a party to,
      or otherwise subject to any provision contained in, any instrument
      evidencing Indebtedness of the Company or such Subsidiary, any agreement
      relating thereto or any other agreement (including, but not limited to,
      its charter or other organizational document) which limits the amount
      of, or otherwise imposes restrictions on the incurring of, Indebtedness
      of the Company, except as specifically indicated in Schedule 5.15.
    

    
                    Section 5.16. Foreign Assets Control Regulations, Etc.  (a) Neither
      the sale of the Notes by the Company hereunder nor its use of the
      proceeds thereof will violate the Trading with the Enemy Act, as
      amended, or any of the foreign assets control regulations of the United
      States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended)
      or any enabling legislation or executive order relating thereto.  
    

    
                    (b) Neither the Company nor any Subsidiary (i) is a Person
      described or designated in the Specially Designated Nationals and
      Blocked Persons List of the Office of Foreign Assets Control or in
      Section 1 of the Anti-Terrorism Order or (ii) engages in any dealings or
      transactions with any such Person.  The Company and its Subsidiaries are
      in compliance, in all material respects, with the USA Patriot Act.
    

    
      
        

        

      

      
        
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      (c) No part of the proceeds from the sale of the Notes hereunder will be
      used, directly or indirectly, for any payments to any governmental
      official or employee, political party, official of a political party,
      candidate for political office, or anyone else acting in an official
      capacity, in order to obtain, retain or direct business or obtain any
      improper advantage, in violation of the United States Foreign Corrupt
      Practices Act of 1977, as amended, assuming in all cases that such Act
      applies to the Company.
    

    
                   Section 5.17. Status under Certain Statutes.  Neither
      the Company nor any Subsidiary is subject to regulation under the
      Investment Company Act of 1940, as amended, the Public Utility Holding
      Company Act of 2005, as amended, the ICC Termination Act of 1995, as
      amended, or the Federal Power Act, as amended.
    

    
                   Section 5.18. Environmental Matters.  (a) Neither
      the Company nor any Subsidiary has knowledge of any claim or has
      received any notice of any claim, and no proceeding has been instituted
      raising any claim against the Company or any of its Subsidiaries or, to
      the Company’s knowledge, any of their respective real properties now or
      formerly owned, leased or operated by any of them or other assets,
      alleging any damage to the environment or violation of any Environmental
      Laws, except, in each case, such as could not reasonably be expected to
      result in a Material Adverse Effect.
    

    
      (b) Neither the Company nor any Subsidiary has knowledge of any facts
      which would give rise to any claim, public or private, of violation of
      Environmental Laws or damage to the environment emanating from,
      occurring on or in any way related to real properties now or formerly
      owned, leased or operated by any of them or to other assets or their
      use, except, in each case, such as could not reasonably be expected to
      result in a Material Adverse Effect.
    

    
      (c) Neither the Company nor any Subsidiary has stored any Hazardous
      Materials on real properties now or formerly owned, leased or operated
      by any of them and has not disposed of any Hazardous Materials in a
      manner contrary to any Environmental Laws in each case in any manner
      that could reasonably be expected to result in a Material Adverse
      Effect; and
    

    
      (d) To the knowledge of the Company, all buildings on all real
      properties now owned, leased or operated by the Company or any
      Subsidiary are in compliance with applicable Environmental Laws, except
      where failure to comply could not reasonably be expected to result in a
      Material Adverse Effect.
    

    
      SECTION 6.             REPRESENTATIONS OF THE PURCHASERS.
    

    
                     Section 6.1. Purchase for Investment.  Each
      Purchaser severally represents that it is purchasing the Notes for its
      own account or for one or more separate accounts maintained by such
      Purchaser or for the account of one or more pension or trust funds and
      not with a view to the distribution thereof, provided that the
      disposition of such Purchaser’s or their property shall at all times be
      within such Purchaser’s or their control.  Each Purchaser understands
      that the Notes have not been registered under the Securities Act and may
      be resold only if registered pursuant to the provisions of the
      Securities Act or if an exemption from registration is available, except
      under circumstances where neither such registration nor such an
      exemption is required by law, and that the Company is not required to
      register the Notes.
    

    
      
        

        

      

      
        
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                     Section 6.2. Source of Funds.  Each
      Purchaser severally represents that at least one of the following
      statements is an accurate representation as to each source of funds (a
      “Source”) to be used by such Purchaser to pay the purchase price of the
      Notes to be purchased by such Purchaser hereunder:
    

    
                           (a)    the Source is an “insurance company general
      account” (as the term is defined in the United States Department of
      Labor’s Prohibited Transaction Exemption (“PTE”)
      95-60) in respect of which the reserves and liabilities (as defined by
      the annual statement for life insurance companies approved by the
      National Association of Insurance Commissioners (the “NAIC Annual
      Statement”)) for the general account contract(s) held by or on
      behalf of any employee benefit plan together with the amount of the
      reserves and liabilities for the general account contract(s) held by or
      on behalf of any other employee benefit plans maintained by the same
      employer (or affiliate thereof as defined in PTE 95-60) or by the same
      employee organization in the general account do not exceed 10% of the
      total reserves and liabilities of the general account (exclusive of
      separate account liabilities) plus surplus as set forth in the NAIC
      Annual Statement filed with such Purchaser’s state of domicile; or
    

    
                           (b)  the Source is a separate account that is
      maintained solely in connection with such Purchaser’s fixed contractual
      obligations under which the amounts payable, or credited, to any
      employee benefit plan (or its related trust) that has any interest in
      such separate account (or to any participant or beneficiary of such plan
      (including any annuitant)) are not affected in any manner by the
      investment performance of the separate account; or
    

    
                           (c)  the Source is either (i) an insurance company
      pooled separate account, within the meaning of PTE 90-1 or (ii) a bank
      collective investment fund, within the meaning of the PTE 91-38 and,
      except as disclosed by such Purchaser to the Company in writing pursuant
      to this clause (c), no employee benefit plan or group of plans
      maintained by the same employer or employee organization beneficially
      owns more than 10% of all assets allocated to such pooled separate
      account or collective investment fund; or
    

    
                           (d)  the Source constitutes assets of an
      “investment fund” (within the meaning of Part V of PTE 84-14 (the “QPAM
      Exemption”)) managed by a “qualified professional asset
      manager” or “QPAM” (within the meaning of Part V of the QPAM Exemption),
      no employee benefit plan’s assets that are included in such investment
      fund, when combined with the assets of all other employee benefit plans
      established or maintained by the same employer or by an affiliate
      (within the meaning of Section V(c)(1) of the QPAM Exemption) of such
      employer or by the same employee organization and managed by such QPAM,
      exceed 20% of the total client assets managed by such QPAM, the
      conditions of Part I(c) and (g) of the QPAM Exemption are satisfied,
      neither the QPAM nor a person controlling or controlled by the QPAM
      (applying the definition of “control” in Section V(e) of the QPAM
      Exemption) owns a 5% or more interest in the Company and (i) the
      identity of such QPAM and (ii) the names of all employee benefit plans
      whose assets are included in such investment fund have been disclosed to
      the Company in writing pursuant to this clause (d); or
    

    
      
        

        

      

      
        
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                           (e) the Source constitutes assets of a “plan(s)”
      (within the meaning of Section IV of PTE 96-23 (the “INHAM Exemption”))
      managed by an “in-house asset manager” or “INHAM” (within the meaning of
      Part IV of the INHAM Exemption), the conditions of Part I(a), (g) and
      (h) of the INHAM Exemption are satisfied, neither the INHAM nor a person
      controlling or controlled by the INHAM (applying the definition of
      “control” in Section IV(d) of the INHAM Exemption) owns a 5% or more
      interest in the Company and (i) the identity of such INHAM and (ii) the
      name(s) of the employee benefit plan(s) whose assets constitute the
      Source have been disclosed to the Company in writing pursuant to this
      clause (e); or
    

    
                           (f)  the Source is a governmental plan; or
    

    
                           (g)  the Source is one or more employee benefit
      plans, or a separate account or trust fund comprised of one or more
      employee benefit plans, each of which has been identified to the Company
      in writing pursuant to this clause (g); or
    

    
                           (h)  the Source does not include assets of any
      employee benefit plan, other than a plan exempt from the coverage of
      ERISA.
    

    
      As used in this Section 6.2, the terms “employee benefit plan,”
      “governmental plan,” and “separate account”
      shall have the respective meanings assigned to such terms in section 3
      of ERISA.
    

    
      SECTION 7.             INFORMATION AS TO COMPANY.
    

    
                     Section 7.1. Financial and Business Information.  The
      Company shall deliver to each holder of Notes that is an Institutional
      Investor:
    

    
                             (a)
      Quarterly Statements — within 60 days (or such shorter period as is
      15 days greater than the period applicable to the filing of the
      Company’s Quarterly Report on Form 10-Q (the “Form 10-Q”)
      with the SEC regardless of whether the Company is subject to the filing
      requirements thereof) after the end of each quarterly fiscal period in
      each fiscal year of the Company (other than the last quarterly fiscal
      period of each such fiscal year), duplicate copies of,
    

    
                                       (i) a consolidated balance sheet of the
      Company and its Subsidiaries as at the end of such quarter, and
    

    
      
        

        

      

      
        
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                                       (ii) consolidated statements of income,
      shareholders’ equity and cash flows of the Company and its Subsidiaries,
      for such quarter and (in the case of the second and third quarters) for
      the portion of the fiscal year ending with such quarter,
    

    
      setting forth in each case in comparative form the figures for the
      corresponding periods in the previous fiscal year, all in reasonable
      detail, prepared in accordance with GAAP applicable to quarterly
      financial statements generally, and certified by a Senior Financial
      Officer as fairly presenting, in all material respects, the financial
      position of the companies being reported on and their results of
      operations and cash flows, subject to changes resulting from year-end
      adjustments, provided that delivery within the time period
      specified above of copies of the Company’s Form 10-Q prepared in
      compliance with the requirements therefor and filed with the SEC shall
      be deemed to satisfy the requirements of this Section 7.1(a), provided,
      further, that the Company shall be deemed to have made such delivery
      of such Form 10-Q if it shall have timely made such Form 10-Q available
      on “EDGAR” and on its home page on the worldwide web (at the date of
      this Agreement located at:  http//www.culpinc.com) and shall have given
      each Purchaser prior notice of such availability on EDGAR and on its
      home page in connection with each delivery (such availability and notice
      thereof being referred to as “Electronic Delivery”);
    

    
                             (b)    Annual
      Statements — within 105 days (or such shorter period as is 15 days
      greater than the period applicable to the filing of the Company’s Annual
      Report on Form 10-K (the “Form 10-K”) with
      the SEC regardless of whether the Company is subject to the filing
      requirements thereof) after the end of each fiscal year of the Company,
      duplicate copies of
    

    
                                     (i) a consolidated balance sheet of the
      Company and its Subsidiaries as at the end of such year, and
    

    
                                     (ii) consolidated statements of income,
      changes in shareholders’ equity and cash flows of the Company and its
      Subsidiaries for such year,
    

    
      setting forth in each case in comparative form the figures for the
      previous fiscal year, all in reasonable detail, prepared in accordance
      with GAAP, and accompanied by
    

    
                                     (A) an opinion thereon of independent
      public accountants of recognized national standing, which opinion shall
      state that such financial statements present fairly, in all material
      respects, the financial position of the companies being reported upon
      and their results of operations and cash flows and have been prepared in
      conformity with GAAP, and that the examination of such accountants in
      connection with such financial statements has been made in accordance
      with generally accepted auditing standards, and that such audit provides
      a reasonable basis for such opinion in the circumstances, and
    

    
      
        

        

      

      
        
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                                     (B) a certificate of such accountants
      stating that they have reviewed this Agreement and stating further
      whether, in making their audit, they have become aware of any condition
      or event that then constitutes a Default or an Event of Default, and, if
      they are aware that any such condition or event then exists, specifying
      the nature and period of the existence thereof (it being understood that
      such accountants shall not be liable, directly or indirectly, for any
      failure to obtain knowledge of any Default or Event of Default unless
      such accountants should have obtained knowledge thereof in making an
      audit in accordance with generally accepted auditing standards or did
      not make such an audit),
    

    
      provided that the delivery within the time period specified above
      of the Company’s Form 10-K for such fiscal year (together with the
      Company’s annual report to shareholders, if any, prepared pursuant to
      Rule 14a-3 under the Exchange Act) prepared in accordance with the
      requirements therefor and filed with the SEC, together with the
      accountant’s certificate described in clause (B) above (the “Accountants’
      Certificate”), shall be deemed to satisfy the requirements of
      this Section 7.1(b), provided, further, that the Company
      shall be deemed to have made such delivery of such Form 10-K if it shall
      have timely made Electronic Delivery thereof, in which event the Company
      shall separately deliver, concurrently with such Electronic Delivery,
      the Accountants’ Certificate;
    

    
                             (c) SEC
      and Other Reports — promptly upon their becoming available, one copy
      of (i) each financial statement, report, notice or proxy statement sent
      by the Company or any Subsidiary to its principal lending banks as a
      whole (excluding information sent to such banks in the ordinary course
      of administration of a bank facility, such as information relating to
      pricing and borrowing availability) or to its public securities holders
      generally, and (ii) each regular or periodic report, each registration
      statement other than Registration Statements on Form S-8 (without
      exhibits except as expressly requested by such holder), and each
      prospectus and all amendments thereto filed by the Company or any
      Subsidiary with the SEC and of all press releases and other statements
      made available generally by the Company or any Subsidiary to the public
      concerning developments that are Material;
    

    
                             (d) Notice
      of Default or Event of Default — promptly, and in any event within
      five days after a Responsible Officer becoming aware of the existence of
      any Default or Event of Default or that any Person has given any notice
      or taken any action with respect to a claimed default hereunder or that
      any Person has given any notice or taken any action with respect to a
      claimed default of the type referred to in Section 11(f), a written
      notice specifying the nature and period of existence thereof and what
      action the Company is taking or proposes to take with respect thereto;
    

    
                             (e) ERISA
      Matters — promptly, and in any event within five days after a
      Responsible Officer becoming aware of any of the following, a written
      notice setting forth the nature thereof and the action, if any, that the
      Company or an ERISA Affiliate proposes to take with respect thereto:
    

    
      
        

        

      

      
        
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                                       (i) with respect to any Plan, any
      reportable event, as defined in section 4043(c) of ERISA and the
      regulations thereunder, for which notice thereof has not been waived
      pursuant to such regulations as in effect on the date hereof; or
    

    
                                       (ii) the taking by the PBGC of steps to
      institute, or the threatening by the PBGC of the institution of,
      proceedings under section 4042 of ERISA for the termination of, or the
      appointment of a trustee to administer, any Plan, or the receipt by the
      Company or any ERISA Affiliate of a notice from a Multi-employer Plan
      that such action has been taken by the PBGC with respect to such
      Multi-employer Plan; or
    

    
                                       (iii) any event, transaction or
      condition that could result in the incurrence of any liability by the
      Company or any ERISA Affiliate pursuant to Title I or IV of ERISA or the
      penalty or excise tax provisions of the Code relating to employee
      benefit plans, or in the imposition of any Lien on any of the rights,
      properties or assets of the Company or any ERISA Affiliate pursuant to
      Title I or IV of ERISA or such penalty or excise tax provisions, if such
      liability or Lien, taken together with any other such liabilities or
      Liens then existing, could reasonably be expected to have a Material
      Adverse Effect;
    

    
                           (f) Notices
      from Governmental Authority — promptly, and in any event within 30
      days of receipt thereof, copies of any notice to the Company or any
      Subsidiary from any Federal or state Governmental Authority relating to
      any order, ruling, statute or other law or regulation that could
      reasonably be expected to have a Material Adverse Effect; and
    

    
                           (g) Requested
      Information — with reasonable promptness, such other data and
      information relating to the business, operations, affairs, financial
      condition, assets or properties of the Company or any of its
      Subsidiaries (including, but without limitation, actual copies of the
      Company’s Form 10-Q and Form 10-K) or relating to the ability of the
      Company to perform its obligations hereunder and under the Notes as from
      time to time may be reasonably requested by any such holder of Notes.
    

    
                     Section 7.2.    Officer’s Certificate.  Each
      set of financial statements delivered to a holder of Notes pursuant to
      Section 7.1(a) or Section 7.1(b) shall be accompanied by a certificate
      of a Senior Financial Officer setting forth (which, in the case of
      Electronic Delivery of any such financial statements, shall be by
      separate concurrent delivery of such certificate to each holder of
      Notes):
    

    
                             (a)  Covenant
      Compliance — the information (including detailed calculations)
      required in order to establish whether the Company was in compliance
      with the requirements of Section 10.1 through Section 10.3, both
      inclusive, and Section 10.5 hereof during the quarterly or annual period
      covered by the statements then being furnished (including with respect
      to each such Section, where applicable, (i) the calculations of the
      maximum or minimum amount, ratio or percentage, as the case may be,
      permissible under the terms of such Sections, and the calculation of the
      amount, ratio or percentage then in existence, and (ii) a detailed
      listing of the Restructuring Charges taken into account in the
      preparation of such calculations); and
    

    
      
        

        

      

      
        
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                             (b)     Event
      of Default — a statement that such Senior Financial Officer has
      reviewed the relevant terms hereof and has made, or caused to be made,
      under his or her supervision, a review of the transactions and
      conditions of the Company and its Subsidiaries from the beginning of the
      quarterly or annual period covered by the statements then being
      furnished to the date of the certificate and that such review shall not
      have disclosed the existence during such period of any condition or
      event that constitutes a Default or an Event of Default or, if any such
      condition or event existed or exists (including, without limitation, any
      such event or condition resulting from the failure of the Company or any
      Subsidiary to comply with any Environmental Law), specifying the nature
      and period of existence thereof and what action the Company shall have
      taken or proposes to take with respect thereto.
    

    
                     Section 7.3. Visitation.  The
      Company shall permit the representatives of each holder of Notes that is
      an Institutional Investor:
    

    
                             (a)           No
      Default — if no Default or Event of Default then exists, at the
      expense of such holder and upon reasonable prior notice to the Company,
      to visit the principal executive office of the Company, to discuss the
      affairs, finances and accounts of the Company and its Subsidiaries with
      the Company’s officers, and (with the consent of the Company, which
      consent will not be unreasonably withheld) its independent public
      accountants, and (with the consent of the Company, which consent will
      not be unreasonably withheld) to visit the other offices and properties
      of the Company and each Subsidiary, all at such reasonable times and as
      often as may be reasonably requested in writing; and
    

    
                             (b)              Default
      — if a Default or Event of Default then exists, at the expense of the
      Company to visit and inspect any of the offices or properties of the
      Company or any Subsidiary, to examine all their respective books of
      account, records, reports and other papers, to make copies and extracts
      therefrom, and to discuss their respective affairs, finances and
      accounts with their respective officers and independent public
      accountants (and by this provision the Company authorizes said
      accountants to discuss the affairs, finances and accounts of the Company
      and its Subsidiaries), all at such times and as often as may be
      requested.
    

    
      SECTION 8.             PAYMENT AND PREPAYMENT OF THE NOTES.
    

    
                      Section 8.1. Required Prepayments.  On
      August 11, 2011, and on the 11th day of each August thereafter to and
      including August 11, 2014, the Company will prepay $2,200,000 principal
      amount (or such lesser principal amount as shall then be outstanding) of
      the Notes at par and without payment of the Make-Whole Amount or any
      premium, provided that upon any partial prepayment of the Notes
      pursuant to Section 8.2 or Section 8.4 or purchase of the Notes
      permitted by Section 8.6, the principal amount of each required
      prepayment of the Notes becoming due under this Section 8.1 on and after
      the date of such prepayment or purchase shall be reduced in the same
      proportion as the aggregate unpaid principal amount of the Notes is
      reduced as a result of such prepayment or purchase.  On August 11, 2015,
      the entire remaining principal amount of the Notes, together with
      accrued and unpaid interest thereon, shall become due and payable.
    

    
      
        

        

      

      
        
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                      Section 8.2. Change in Control.  (a) Notice
      of Change in Control or Control Event. The Company will, within five
      Business Days after any Responsible Officer has knowledge of the
      occurrence of any Change in Control or Control Event, give written
      notice of such Change in Control or Control Event to each holder of
      Notes unless notice in respect of such Change in Control (or the
      Change in Control contemplated by such Control Event) shall have been
      given pursuant to subparagraph (b) of this Section.  If a Change in
      Control has occurred, such notice shall contain and constitute an offer
      to prepay Notes as described in subparagraph (c) of this Section and
      shall be accompanied by the certificate described in subparagraph (g) of
      this Section.
    

    
               (b) Condition
      to Company Action.  The Company will not take any action that
      consummates or finalizes a Change in Control unless (i) at least 30 days
      prior to such action it shall have given to each holder of Notes written
      notice containing and constituting an offer to prepay Notes as described
      in subparagraph (c) of this Section, accompanied by the certificate
      described in subparagraph (g) of this Section, and
      (ii) contemporaneously with such action, it prepays all Notes required
      to be prepaid in accordance with this Section.
    

    
               (c) Offer to
      Prepay Notes.  The offer to prepay Notes contemplated by
      subparagraphs (a) and (b) of this Section shall be an offer to prepay,
      in accordance with and subject to this Section, all, but not less than
      all, the Notes held by each holder (in this case only, “holder”
      in respect of any Note registered in the name of a nominee for a
      disclosed beneficial owner shall mean such beneficial owner) on a date
      specified in such offer (the “Proposed Prepayment Date”).  If
      such Proposed Prepayment Date is in connection with an offer
      contemplated by subparagraph (a) of this Section, such date shall be not
      less than 15 days and not more than 30 days after the date of such offer
      (if the Proposed Prepayment Date shall not be specified in such offer,
      the Proposed Prepayment Date shall be the first Business Day after the
      30th day after the date of such offer).
    

    
               (d) Acceptance.  A
      holder of Notes may accept the offer to prepay made pursuant to this
      Section by causing a notice of such acceptance to be delivered to the
      Company at least five days prior to the Proposed Prepayment Date.  If
      the offer is so accepted by any holder of Notes, the Company at least
      four days prior to the Proposed Prepayment Date shall give written
      notice to each holder of Notes that has not so accepted the offer, in
      which notice the Company shall (i) state the aggregate outstanding
      principal amount of Notes in respect of which the offer has been
      accepted and (ii) renew the offer and extend the time for acceptance by
      stating that any holder of Notes may yet accept the offer, whether
      theretofore rejected or not, by causing a notice of such acceptance to
      be delivered to the Company at least two days prior to the Proposed
      Prepayment Date. A failure by a holder of Notes to respond to
      an offer to prepay made pursuant to this Section shall be deemed to
      constitute a rejection of such offer by such holder.
    

    
      
        

        

      

      
        
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               (e) Prepayment.  Prepayment
      of the Notes to be prepaid pursuant to this Section shall be at 100% of
      the principal amount of such Notes, together with interest on such Notes
      accrued to the date of prepayment, but without Make-Whole Amount or
      other premium.  The prepayment shall be made on the Proposed Prepayment
      Date except as provided in subparagraph (f) of this Section.
    

    
               (f) Deferral
      Pending Change in Control.  The obligation of the Company to prepay
      Notes pursuant to the offers required by subparagraph (b) and accepted
      in accordance with subparagraph (d) of this Section is subject to the
      occurrence of the Change in Control in respect of which such offers and
      acceptances shall have been made.  In the event that such Change in
      Control has not occurred on the Proposed Prepayment Date in respect
      thereof, the prepayment shall be deferred until and shall be made on the
      date on which such Change in Control occurs.  The Company shall keep
      each holder of Notes reasonably and timely informed of (i) any such
      deferral of the date of prepayment, (ii) the date on which such Change
      in Control and the prepayment are expected to occur, and (iii) any
      determination by the Company that efforts to effect such Change in
      Control have ceased or been abandoned (in which case the offers and
      acceptances made pursuant to this Section in respect of such Change in
      Control shall be deemed rescinded).
    

    
               (g)  Officer’s
      Certificate. Each offer to prepay the Notes pursuant to this Section
      shall be accompanied by a certificate, executed by a Senior Financial
      Officer of the Company and dated the date of such offer, specifying:
      (i) the Proposed Prepayment Date; (ii) that such offer is made pursuant
      to this Section 8.2; (iii) the principal amount of each Note offered to
      be prepaid; (iv) the interest that would be due on each Note offered to
      be prepaid, accrued to the Proposed Prepayment Date; (v) that the
      conditions of this Section have been fulfilled; and (vi) in reasonable
      detail, the nature and date or proposed date of the Change in Control.
    

    
               (h)        “Change
      in Control” Defined.  A “Change in Control”
      shall be deemed to have occurred if any Person or Persons acting in
      concert (other than the Culp Family), together with Affiliates thereof,
      shall in the aggregate, directly or indirectly, control or own
      (beneficially or otherwise) more than 50% (by number of shares) of the
      issued and outstanding Voting Stock of the Company.  “Culp
      Family” means Robert G. Culp III, his spouse, his mother, his
      siblings, his lineal descendants and any trusts for the exclusive
      benefit of any such individual, so long as such individual has the
      exclusive right to control each such trust.
    

    
               (i)        “Control
      Event” Defined.  “Control Event”
      means:
    

    
                           (i)  the execution by the Company or any of its
      Subsidiaries or Affiliates of any agreement or letter of intent with
      respect to any proposed transaction or event or series of transactions
      or events which, individually or in the aggregate, may reasonably be
      expected to result in a Change in Control,
    

    
                          (ii) the execution of any written agreement which,
      when fully performed by the parties thereto, would result in a Change in
      Control, or
    

    
      
        

        

      

      
        
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                         (iii) the making of any written offer by any person
      (as such term is used in section 13(d) and section 14(d)(2) of the
      Exchange Act as in effect on the date of the Closing) or related persons
      constituting a group (as such term is used in Rule 13d-5 under the
      Exchange Act as in effect on the date of the Closing) to the holders of
      the common stock of the Company, which offer, if accepted by the
      requisite number of holders, would result in a Change in Control.
    

    
                     Section 8.3. Allocation of Partial Prepayments.  In
      the case of partial prepayment of the Notes (other than a prepayment
      pursuant to Section 8.2), the principal amount of the Notes to be
      prepaid shall be allocated among all of the Notes at the time
      outstanding in proportion, as nearly as practicable, to the respective
      unpaid principal amounts thereof not theretofore called for
      prepayment.  All prepayments made pursuant to Section 8.2 shall be
      applied only to the Notes of the holders who have elected to participate
      in such prepayment.
    

    
                      Section 8.4. Optional Prepayments with Make-Whole
      Amount.  The Company may, at its option, upon notice as provided
      below, prepay at any time all, or from time to time any part of, the
      Notes, in an amount not less than 10% of the aggregate principal amount
      of the Notes then outstanding in the case of a partial prepayment, at
      100% of the principal amount so prepaid, plus the Make-Whole Amount and
      accrued interest determined for the prepayment date with respect to such
      principal amount.  The Company will give each holder of Notes written
      notice of each optional prepayment under this Section 8.4 not less than
      30 days and not more than 60 days prior to the date fixed for such
      prepayment.  Each such notice shall specify such date, the aggregate
      principal amount of the Notes to be prepaid on such date, the principal
      amount of each Note held by such holder to be prepaid (determined in
      accordance with Section 8.3), and the interest to be paid on the
      prepayment date with respect to such principal amount being prepaid, and
      shall be accompanied by a certificate of a Senior Financial Officer as
      to the estimated Make-Whole Amount due in connection with such
      prepayment (calculated as if the date of such notice were the date of
      the prepayment), setting forth the details of such computation.  Two
      Business Days prior to such prepayment, the Company shall deliver to
      each holder of Notes a certificate of a Senior Financial Officer
      specifying the calculation of such Make-Whole Amount as of the specified
      prepayment date.  The calculations with respect to the Make-Whole Amount
      shall in any event be subject to the review and approval of the holders
      of the Notes and, in the case of any disagreement among such holders and
      the Company with respect to such calculations or method of computation
      thereof, the conclusion of such holders shall, in the absence of
      manifest error, be deemed, binding and conclusive.   
    

    
                      Section 8.5. Maturity; Surrender, Etc.  In
      the case of each prepayment of Notes pursuant to this Section 8, the
      principal amount of each Note to be prepaid shall mature and become due
      and payable on the date fixed for such prepayment (which shall be a
      Business Day), together with interest on such principal amount accrued
      to such date and the applicable Make-Whole Amount, if any.  From and
      after such date, unless the Company shall fail to pay such principal
      amount when so due and payable, together with the interest and
      Make-Whole Amount, if any, as aforesaid, interest on such principal
      amount shall cease to accrue.  Any Note paid or prepaid in full shall be
      surrendered to the Company and cancelled and shall not be reissued, and
      no Note shall be issued in lieu of any prepaid principal amount of any
      Note.
    

    
      
        

        

      

      
        
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                     Section 8.6. Purchase of Notes.  The
      Company will not and will not permit any Affiliate to purchase, redeem,
      prepay or otherwise acquire, directly or indirectly, any of the
      outstanding Notes except upon the payment or prepayment of the Notes in
      accordance with the terms of this Agreement and the Notes.  The Company
      will promptly cancel all Notes acquired by it or any Affiliate pursuant
      to any payment or prepayment of Notes pursuant to any provision of this
      Agreement and no Notes may be issued in substitution or exchange for any
      such Notes.
    

    
                      Section 8.7. Make-Whole Amount.
    

    
      “Make-Whole Amount” means, with respect to any Note,
      an amount equal to the excess, if any, of the Discounted Value of the
      Remaining Scheduled Payments with respect to the Called Principal of
      such Note over the amount of such Called Principal, provided that
      the Make-Whole Amount may in no event be less than zero.  For the
      purposes of determining the Make-Whole Amount, the following terms have
      the following meanings:
    

    
      “Called Principal” means, with respect to any Note,
      the principal of such Note that is to be prepaid pursuant to Section 8.4
      or has become or is declared to be immediately due and payable pursuant
      to Section 12.1, as the context requires.
    

    
      “Discounted Value” means, with respect to the Called
      Principal of any Note, the amount obtained by discounting all Remaining
      Scheduled Payments with respect to such Called Principal from their
      respective scheduled due dates to the Settlement Date with respect to
      such Called Principal, in accordance with accepted financial practice
      and at a discount factor (applied on the same periodic basis as that on
      which interest on the Notes is payable) equal to the Reinvestment Yield
      with respect to such Called Principal.
    

    
      “Reinvestment Yield” means, with respect to the
      Called Principal of any Note, 0.50% over the yield to maturity implied
      by (i) the yields reported as of 10:00 a.m. (New York City time) on the
      second Business Day preceding the Settlement Date with respect to such
      Called Principal, on the display designated as “Page PX1” (or such other
      display as may replace Page PX1) on Bloomberg Financial Markets for the
      most recently issued actively traded on the run U.S. Treasury securities
      having a maturity equal to the Remaining Average Life of such Called
      Principal as of such Settlement Date, or (ii) if such yields are
      not reported as of such time or the yields reported as of such time are
      not ascertainable (including by way of interpolation), the Treasury
      Constant Maturity Series Yields reported, for the latest day for which
      such yields have been so reported as of the second Business Day
      preceding the Settlement Date with respect to such Called Principal, in
      Federal Reserve Statistical Release H.15 (or any comparable successor
      publication) for U.S. Treasury securities having a constant maturity
      equal to the Remaining Average Life of such Called Principal as of such
      Settlement Date.  
    

    
      In the case of each determination under clause (i) or clause (ii), as
      the case may be, of the preceding paragraph, such implied yield will be
      determined, if necessary, by (a) converting U.S. Treasury bill
      quotations to bond equivalent yields in accordance with accepted
      financial practice and (b) interpolating linearly between (1) the
      applicable U.S. Treasury security with the maturity closest to and
      greater than such Remaining Average Life and (2) the applicable U.S.
      Treasury security with the maturity closest to and less than such
      Remaining Average Life.  The Reinvestment Yield shall be rounded to the
      number of decimal places as appears in the interest rate of the
      applicable Note.
    

    
      
        

        

      

      
        
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      “Remaining Average Life” means, with respect to any
      Called Principal, the number of years (calculated to the nearest
      one-twelfth year) obtained by dividing (i) such Called Principal into
      (ii) the sum of the products obtained by multiplying (a) the principal
      component of each Remaining Scheduled Payment with respect to such
      Called Principal by (b) the number of years (calculated to the nearest
      one-twelfth year) that will elapse between the Settlement Date with
      respect to such Called Principal and the scheduled due date of such
      Remaining Scheduled Payment.
    

    
      “Remaining Scheduled Payments” means, with respect to
      the Called Principal of any Note, all payments of such Called Principal
      and interest thereon that would be due after the Settlement Date with
      respect to such Called Principal if no payment of such Called Principal
      were made prior to its scheduled due date, provided that if such
      Settlement Date is not a date on which interest payments are due to be
      made under the terms of the Notes, then the amount of the next
      succeeding scheduled interest payment will be reduced by the amount of
      interest accrued to such Settlement Date and required to be paid on such
      Settlement Date pursuant to Section 8.4 or Section 12.1.
    

    
      “Settlement Date” means, with respect to the Called
      Principal of any Note, the date on which such Called Principal is to be
      prepaid pursuant to Section 8.4 or has become or is declared to be
      immediately due and payable pursuant to Section 12.1, as the context
      requires.
    

    
      SECTION 9.             AFFIRMATIVE COVENANTS.
    

    
      The Company covenants that so long as any of the Notes are outstanding:
    

    
                     Section 9.1. Compliance with Law.  Without
      limiting Section 10.11, the Company will, and will cause each of its
      Subsidiaries to, comply with all laws, ordinances or governmental rules
      or regulations to which each of them is subject, including, without
      limitation, ERISA, the USA Patriot Act and Environmental Laws, and will
      obtain and maintain in effect all licenses, certificates, permits,
      franchises and other governmental authorizations necessary to the
      ownership of their respective properties or to the conduct of their
      respective businesses, in each case to the extent necessary to ensure
      that non-compliance with such laws, ordinances or governmental rules or
      regulations or failures to obtain or maintain in effect such licenses,
      certificates, permits, franchises and other governmental authorizations
      could not, individually or in the aggregate, reasonably be expected to
      have a Material Adverse Effect.
    

    
                      Section 9.2.  Insurance.  The
      Company will, and will cause each of its Subsidiaries to, maintain, with
      financially sound and reputable insurers, insurance with respect to
      their respective properties and businesses against such casualties and
      contingencies, of such types, on such terms and in such amounts
      (including deductibles, co-insurance and self-insurance, if adequate
      reserves are maintained with respect thereto) as is customary in the
      case of entities of established reputations engaged in the same or a
      similar business and similarly situated.
    

    
      
        

        

      

      
        
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                     Section 9.3. Maintenance of Properties.  The
      Company will, and will cause each of its Subsidiaries to, maintain and
      keep, or cause to be maintained and kept, their respective properties in
      reasonably good repair, working order and condition (other than ordinary
      wear and tear), so that the business carried on in connection therewith
      may be properly conducted at all times, provided that this
      Section shall not prevent the Company or any Subsidiary from
      discontinuing the operation and the maintenance of any of its properties
      if such discontinuance is desirable in the conduct of its business and
      the Company has concluded that such discontinuance could not,
      individually or in the aggregate, reasonably be expected to have a
      Material Adverse Effect.
    

    
                     Section 9.4. Payment of Taxes and Claims.  The
      Company will, and will cause each of its Subsidiaries to, file all
      material tax returns required to be filed in any jurisdiction and to pay
      and discharge all taxes shown to be due and payable on such returns and
      all other taxes, assessments, governmental charges, or levies imposed on
      them or any of their properties, assets, income or franchises, to the
      extent the same have become due and payable and before they have become
      delinquent and all claims for which sums have become due and payable
      that have or might become a Lien on properties or assets of the Company
      or any Subsidiary, provided that neither the Company nor any
      Subsidiary need pay any such tax, assessment, charge, levy or claim if
      (i) the amount, applicability or validity thereof is contested by the
      Company or such Subsidiary on a timely basis in good faith and in
      appropriate proceedings, and the Company or a Subsidiary has established
      adequate reserves therefor in accordance with GAAP on the books of the
      Company or such Subsidiary or (ii) the nonpayment of all such taxes,
      assessments, charges, levies and claims in the aggregate could not
      reasonably be expected to have a Material Adverse Effect.
    

    
                      Section 9.5. Corporate Existence, Etc.  Subject
      to Section 10.4, the Company will at all times preserve and keep in full
      force and effect its corporate existence.  Subject to Sections 10.4 and
      10.5 the Company will at all times preserve and keep in full force and
      effect the corporate existence of each of its Subsidiaries (unless
      merged into the Company or a Wholly-Owned Subsidiary) and all rights and
      franchises of the Company and its Subsidiaries unless, in the good faith
      judgment of the Company, the termination of or failure to preserve and
      keep in full force and effect such corporate existence, right or
      franchise could not, individually or in the aggregate, have a Material
      Adverse Effect.
    

    
                      Section 9.6. Notes to Rank Pari Passu.  The
      Notes and all other obligations under this Agreement of the Company are
      and at all times shall rank at least pari passu in right of
      payment with all other present and future Senior Funded Debt (actual or
      contingent) of the Company which is not expressed to be subordinate or
      junior in rank to any other unsecured Indebtedness of the Company.
    

    
                      Section 9.7. Guaranty by Subsidiaries.  The
      Company will cause each Subsidiary which becomes a borrower or a
      guarantor in respect of Indebtedness of the Company outstanding under
      any facility or agreement in respect of which senior Indebtedness of the
      Company may be outstanding (including, without limitation, the Credit
      Agreement and the 1998 Note Agreement and any replacement of either
      thereof) to concurrently enter into a Subsidiary Guaranty, and within
      three Business Days thereafter will deliver to each of the holders of
      the Notes the following items:
    

    
      
        

        

      

      
        
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                           (a) an executed counterpart of such Subsidiary
      Guaranty or joinder agreement in respect of an existing Subsidiary
      Guaranty, as appropriate; and
    

    
                           (b) such other documents, certificates, legal
      opinions and information as the Required Holders reasonably may require
      regarding such Subsidiary, the authorization of the transactions
      contemplated by such Subsidiary Guaranty and the enforceability of such
      Subsidiary Guaranty, including without limitation an Intercreditor
      Agreement.
    

    
                     Section 9.8. Books and Records.  The
      Company will, and will cause each of its Subsidiaries to, maintain
      proper books of record and account in conformity with GAAP and all
      applicable requirements of any Governmental Authority having legal or
      regulatory jurisdiction over the Company or such Subsidiary, as the case
      may be.
    

    
                     Section 9.9. B&H Acquisition.  On
      the date of Closing, the proceeds from the sale of the Notes shall be
      applied to fund a portion of the purchase price for the B&H Acquisition,
      and the B&H Acquisition shall be consummated according to the terms of
      the Purchase Agreement.
    

    
      SECTION 10.            NEGATIVE COVENANTS.
    

    
      The Company covenants that so long as any of the Notes are outstanding:
    

    
                      Section 10.1. Tangible Net Worth.  The
      Company shall not at any time permit Tangible Net Worth to be less than
      the sum of (a) $65,164,800, plus (b) an aggregate amount equal to 50% of
      its Consolidated Net Income (but, in each case, only if a positive
      number) for each completed fiscal quarter, beginning with the fiscal
      quarter ending August 3, 2008.
    

    
                      Section 10.2. Financial Ratios.
    

    
                           (a) The Company shall not at any time permit the
      ratio of (i) Consolidated Total Debt to (ii) Consolidated EBITDA for the
      period of four consecutive fiscal quarters then most recently ended, to
      exceed 2.5 to 1.0.
    

    
                           (b) The Company will keep and maintain the ratio of
      Consolidated EBITDAR to Consolidated Fixed Charges for each period of
      four consecutive fiscal quarters at not less than 2.25 to 1.0.
    

    
                           (c) The Company shall not at any time permit
      Priority Debt to exceed 15% of Consolidated Net Worth.
    

    
      
        

        

      

      
        
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                      Section 10.3.     Liens.  The
      Company will not, and will not permit any of its Subsidiaries to,
      directly or indirectly create, incur, assume or permit to exist (upon
      the happening of a contingency or otherwise) any Lien on or with respect
      to any property or asset (including, without limitation, any document or
      instrument in respect of goods or accounts receivable) of the Company or
      any such Subsidiary, whether now owned or held or hereafter acquired, or
      any income or profits therefrom, or assign or otherwise convey any right
      to receive income or profits, except:
    

    
                           (a) Liens for taxes, assessments or other
      governmental charges which are not yet due and payable or the payment of
      which is not at the time required by Section 9.4;
    

    
                           (b) any attachment or judgment Lien, unless the
      judgment it secures shall not, within 30 days after the entry thereof,
      have been discharged or execution thereof stayed pending appeal and with
      respect to which judgment adequate reserves have been established by the
      Company and its Subsidiaries in accordance with GAAP;
    

    
                           (c) statutory Liens of landlords and Liens of
      carriers, warehousemen, mechanics, materialmen and other similar Liens,
      in each case, incurred in the ordinary course of business for sums not
      yet due and payable or the payment of which is not at the time required
      by Section 9.4;
    

    
                           (d) leases or subleases granted to others,
      easements, rights-of-way, restrictions and other similar charges or
      encumbrances, in each case incidental to, and not interfering with, the
      ordinary conduct of the business of the Company or any of its
      Subsidiaries, provided that such Liens do not, in the aggregate,
      materially detract from the value of such property;
    

    
                           (e) Liens (other than any Lien imposed by ERISA)
      incurred or deposits made in the ordinary course of business (i) in
      connection with workers’ compensation, unemployment insurance and other
      types of social security or retirement benefits, or (ii) to secure (or
      to obtain letters of credit that secure) the performance of tenders,
      statutory obligations, surety bonds, appeal bonds, bids, leases (other
      than Capital Leases), performance bonds, purchase, construction or sales
      contracts and other similar obligations, in each case not incurred or
      made in connection with the borrowing of money, the obtaining of
      advances or credit or the payment of the deferred purchase price of
      property;
    

    
                           (f) Liens existing on the date of this Agreement
      and securing the Indebtedness of the Company and its Subsidiaries
      referred to in Schedule 5.15 as secured Indebtedness;
    

    
                           (g) Liens on property or assets of the Company or
      any of its Subsidiaries securing Indebtedness owing to the Company or to
      any of its Wholly-Owned Subsidiaries;
    

    
      
        

        

      

      
        
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                           (h) any Lien (other than Vendor Finance Liens)
      created to secure all or any part of the purchase price, or to secure
      Indebtedness incurred or assumed to pay all or any part of the purchase
      price or cost of construction, of tangible property (or any improvement
      thereon) acquired or constructed by the Company or a Subsidiary after
      the date of the Closing, provided that
    

    
                                     (i)  any such Lien shall extend solely to
      the item or items of such property (or improvement thereon) so acquired
      or constructed and, if required by the terms of the instrument
      originally creating such Lien, other property (or improvement thereon)
      which is an improvement to or is acquired for specific use in connection
      with such acquired or constructed property (or improvement thereon) or
      which is real property being improved by such acquired or constructed
      property (or improvement thereon),
    

    
                                    (ii) the principal amount of the
      Indebtedness secured by any such Lien shall at no time exceed an amount
      equal to the lesser of (A) the cost to the Company or such Subsidiary of
      the property (or improvement thereon) so acquired or constructed and
      (B) the Fair Market Value (as determined in good faith by the board of
      directors of the Company) of such property (or improvement thereon) at
      the time of such acquisition or construction, and
    

    
                                   (iii) any such Lien shall be created
      contemporaneously with, or within 18 months after, the acquisition or
      construction of such property;
    

    
                           (i) Liens securing Indebtedness and other
      obligations (including trade accounts payable) of the Company and its
      Subsidiaries incurred to finance the acquisition of equipment, which
      financing is obtained from or through the suppliers of such equipment (“Vendor
      Finance Liens”); provided that (i) such Liens shall
      extend solely to the equipment so acquired and (ii) the aggregate amount
      of Indebtedness and other obligations secured by such Liens shall at no
      time exceed $5,000,000;
    

    
                           (j) any Lien existing on property of a Person
      immediately prior to its being consolidated with or merged into the
      Company or a Subsidiary or its becoming a Subsidiary, or any Lien
      existing on any property acquired by the Company or any Subsidiary at
      the time such property is so acquired (whether or not the Indebtedness
      secured thereby shall have been assumed), provided that (i) no
      such Lien shall have been created or assumed in contemplation of such
      consolidation or merger or such Person’s becoming a Subsidiary or such
      acquisition of property, and (ii) each such Lien shall extend solely to
      the item or items of property so acquired and, if required by the terms
      of the instrument originally creating such Lien, other property which is
      an improvement to or is acquired for specific use in connection with
      such acquired property;
    

    
                           (k) any Lien renewing, extending or refunding any
      Lien permitted by paragraphs (f), (h), (i) or (j) of this Section, provided
      that (i) the principal amount of Indebtedness secured by such Lien
      immediately prior to such extension, renewal or refunding is not
      increased or the maturity thereof reduced, (ii) such Lien is not
      extended to any other property, and (iii) immediately after such
      extension, renewal or refunding no Default or Event of Default would
      exist;
    

    
      
        

        

      

      
        
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                           (l) other Liens not otherwise permitted by
      paragraphs (a) through (k) securing Indebtedness other than the
      principal credit facilities of the Company and its Subsidiaries from
      time to time; provided that after giving effect to the imposition
      of such Lien and the incurrence of the obligation secured thereby,
      Priority Debt shall not exceed 15% of Consolidated Net Worth.
    

    
                      Section 10.4. Merger, Consolidation, Etc.  The
      Company will not consolidate with or merge with any other Person or
      convey, transfer or lease all or substantially all of its assets in a
      single transaction or series of transactions to any Person unless:
    

    
                             (a) the successor formed by such consolidation or
      the survivor of such merger or the Person that acquires by conveyance,
      transfer or lease all or substantially all of the assets of the Company
      as an entirety, as the case may be, shall be a solvent corporation or
      limited liability company organized and existing under the laws of the
      United States or any State thereof (including the District of Columbia),
      and, if the Company is not such corporation or limited liability
      company, (i) such corporation or limited liability company shall have
      executed and delivered to each holder of any Notes its assumption of the
      due and punctual performance and observance of each covenant and
      condition of this Agreement and the Notes and (ii) such corporation or
      limited liability company shall have caused to be delivered to each
      holder of any Notes an opinion of nationally recognized independent
      counsel, or other independent counsel reasonably satisfactory to the
      Required Holders, to the effect that all agreements or instruments
      effecting such assumption are enforceable in accordance with their terms
      and comply with the terms hereof; and
    

    
                             (b) immediately before and immediately after
      giving effect to such transaction, no Default or Event of Default shall
      have occurred and be continuing.
    

    
      No such conveyance, transfer or lease of substantially all of the assets
      of the Company shall have the effect of releasing the Company or any
      successor corporation or limited liability company that shall
      theretofore have become such in the manner prescribed in this
      Section 10.4 from its liability under this Agreement or the Notes.
    

    
                      Section 10.5. Sale of Assets, etc.  Except
      as permitted under Section 10.4, the Company will not, and will not
      permit any of its Subsidiaries to, make any Asset Disposition unless:
    

    
                           (a) in the good faith opinion of the Company, the
      Asset Disposition is in exchange for consideration having a Fair Market
      Value at least equal to that of the property exchanged and is in the
      best interest of the Company or such Subsidiary; and
    

    
                           (b) immediately prior to and after giving effect to
      the Asset Disposition, no Default or Event of Default would exist; and
    

    
      
        

        

      

      
        
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                           (c) immediately after giving effect to the Asset
      Disposition, the Disposition Value of such property, together with all
      other property of the Company and its Subsidiaries that was the subject
      of any Asset Disposition occurring during the immediately preceding 365
      days, would not exceed 15% of Consolidated Assets as of the end of the
      then most recently ended fiscal quarter of the Company.
    

    
                      Section 10.6. Transactions with Affiliates.  The
      Company will not and will not permit any Subsidiary to enter into
      directly or indirectly any transaction or group of related transactions
      (including without limitation the purchase, lease, sale or exchange of
      properties of any kind or the rendering of any service) with any
      Affiliate (other than the Company or another Subsidiary), except in the
      ordinary course and pursuant to the reasonable requirements of the
      Company’s or such Subsidiary’s business and upon fair and reasonable
      terms no less favorable to the Company or such Subsidiary than would be
      obtainable in a comparable arm’s-length transaction with a Person not an
      Affiliate.
    

    
                Section 10.7. Sale and Lease-Back.  The
      Company will not, and will not permit any Subsidiary to, enter into or
      permit to remain in effect any Sale and Leaseback Transaction with any
      Person.  Notwithstanding the foregoing, the Company may enter into a
      Sale and Leaseback Transaction relating to its corporate headquarters
      located in High Point, North Carolina; provided that (i) the
      sales price received by the Company in connection with such transaction
      is not less than $5,500,000, (ii) the proceeds of such sale (less
      reasonable expenses and taxes paid in connection therewith) are applied
      to the repayment of the Indebtedness secured by such corporate
      headquarters, and (iii) to the extent such transaction involves a
      Capital Lease, the Indebtedness incurred by the Company and attributable
      to such transaction (consisting of the aggregate Rentals to become due
      under the related lease, discounted from the respective due dates at the
      interest rate implicit in such Rentals and otherwise in accordance with
      GAAP) shall constitute Priority Debt and shall, at the time of such
      transaction and after giving effect thereto, be permitted within the
      limitations of Section 10.2(c) hereof; and provided, further,
      that the Company may seek in good faith the prior written consent of the
      Required Holders for a Sale and Leaseback Transaction relating to its
      corporate headquarters with a sales price of less than $5,500,000, it
      being understood that the manner in which the Company proposes to payoff
      all existing Indebtedness secured by such corporate headquarters must be
      acceptable to the Required Holders.
    

    
                Section 10.8. Sale or Discount of Receivables.  The
      Company will not, and will not permit any Subsidiary to, sell with
      recourse, or discount or otherwise sell for less than the face value
      thereof, any of its notes or accounts receivable.
    

    
                      Section 10.9. Change in Business.  The
      Company will not, and will not permit any Subsidiary to, enter into any
      business other than the business presently conducted by the Company and
      its Subsidiaries and businesses reasonably related thereto.  
    

    
               Section 10.10. Restrictive Agreements.  The
      Company will not permit any Subsidiary to enter into or otherwise be
      bound by or subject to any contract or agreement (including, without
      limitation, any provision of its certificate or articles of
      incorporation or bylaws) that restricts its ability (i) to pay dividends
      or other distributions on account of its stock, (ii) to create, grant or
      permit to exist any Liens securing the Notes or guarantees thereof or
      (iii) to guaranty the obligations of the Company under the Notes and
      this Agreement; provided, however, that Subsidiaries of the Company
      incorporated under the laws of China may agree to the foregoing
      restrictions in credit facilities with Chinese financial institutions so
      long as the aggregate amount committed and lent under such credit
      facilities does not exceed $5,000,000.
    

    
      
        

        

      

      
        
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                      Section 10.11. Terrorism Sanctions Regulations.  The
      Company will not and will not permit any Subsidiary to (a) become a
      Person described or designated in the Specially Designated Nationals and
      Blocked Persons List of the Office of Foreign Assets Control or in
      Section 1 of the Anti-Terrorism Order or (b) engage in any dealings or
      transactions with any such Person.
    

    
                      Section 10.12. Liens and Reserves.  The
      Company will not and will not permit any Subsidiary to (a) allow any
      Liens to exist on any of their respective properties securing the
      obligations of the Company or any Subsidiary under the Credit Agreement
      or (b) establish any liquidity reserves in connection with the Credit
      Agreement or otherwise.
    

    
      SECTION 11.            EVENTS OF DEFAULT.
    

    
      An “Event of Default” shall exist if any of the
      following conditions or events shall occur and be continuing:
    

    
                           (a) the Company defaults in the payment of any
      principal or Make-Whole Amount, if any, on any Note when the same
      becomes due and payable, whether at maturity or at a date fixed for
      prepayment or by declaration or otherwise; or
    

    
                           (b) the Company defaults in the payment of any
      interest on any Note for more than five Business Days after the same
      becomes due and payable; or
    

    
                           (c) the Company defaults in the performance of or
      compliance with any term contained in Section 7.1(d) or Section 10; or
    

    
                           (d) the Company defaults in the performance of or
      compliance with any term contained herein (other than those referred to
      in Sections 11(a), (b) and (c)) and such default is not remedied within
      30 days after the earlier of (i) a Responsible Officer obtaining actual
      knowledge of such default and (ii) the Company receiving written notice
      of such default from any holder of a Note (any such written notice to be
      identified as a “notice of default” and to refer specifically to this
      Section 11(d)); or
    

    
                           (e) any representation or warranty made in writing
      by or on behalf of the Company or by any officer of the Company in this
      Agreement or in any writing furnished in connection with the
      transactions contemplated hereby proves to have been false or incorrect
      in any material respect on the date as of which made; or
    

    
                           (f) (i) the Company or any Subsidiary is in default
      (as principal or as guarantor or other surety) in the payment of any
      principal of or premium or make-whole amount or interest on any
      Indebtedness that is outstanding in an aggregate principal amount of at
      least $1,000,000 beyond any period of grace provided with respect
      thereto, or (ii) the Company or any Subsidiary is in default in the
      performance of or compliance with any term of any evidence of any
      Indebtedness in an aggregate outstanding principal amount of at least
      $1,000,000 or of any mortgage, indenture or other agreement relating
      thereto or any other condition exists, and as a consequence of such
      default or condition such Indebtedness has become, or has been declared
      (or one or more Persons are entitled to declare such Indebtedness to
      be), due and payable before its stated maturity or before its regularly
      scheduled dates of payment, or (iii) as a consequence of the occurrence
      or continuation of any event or condition (other than the passage of
      time or the right of the holder of Indebtedness to convert such
      Indebtedness into equity interests), (x) the Company or any Subsidiary
      has become obligated to purchase or repay Indebtedness before its
      regular maturity or before its regularly scheduled dates of payment in
      an aggregate outstanding principal amount of at least $1,000,000, or
      (y) one or more Persons have the right to require the Company or any
      Subsidiary so to purchase or repay such Indebtedness; or
    

    
      
        

        

      

      
        
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                           (g) the Company or any Subsidiary (i) is generally
      not paying, or admits in writing its inability to pay, its debts as they
      become due, (ii) files, or consents by answer or otherwise to the filing
      against it of, a petition for relief or reorganization or arrangement or
      any other petition in bankruptcy, for liquidation or to take advantage
      of any bankruptcy, insolvency, reorganization, moratorium or other
      similar law of any jurisdiction, (iii) makes an assignment for the
      benefit of its creditors, (iv) consents to the appointment of a
      custodian, receiver, trustee or other officer with similar powers with
      respect to it or with respect to any substantial part of its property,
      (v) is adjudicated as insolvent or to be liquidated, or (vi) takes
      corporate action for the purpose of any of the foregoing; or
    

    
                           (h) a court or Governmental Authority of competent
      jurisdiction enters an order appointing, without consent by the Company
      or any of its Subsidiaries, a custodian, receiver, trustee or other
      officer with similar powers with respect to it or with respect to any
      substantial part of its property, or constituting an order for relief or
      approving a petition for relief or reorganization or any other petition
      in bankruptcy or for liquidation or to take advantage of any bankruptcy
      or insolvency law of any jurisdiction, or ordering the dissolution,
      winding-up or liquidation of the Company or any of its Subsidiaries, or
      any such petition shall be filed against the Company or any of its
      Subsidiaries and such petition shall not be dismissed within 60 days; or
    

    
                           (i) a final judgment or judgments for the payment
      of money aggregating in excess of $5,000,000 are rendered against one or
      more of the Company and its Subsidiaries and which judgments are not,
      within 60 days after entry thereof, bonded, discharged or stayed pending
      appeal, or are not discharged within 60 days after the expiration of
      such stay; or
    

    
                           (j)  if (i) any Plan shall fail to satisfy the
      minimum funding standards of ERISA or the Code for any plan year or part
      thereof or a waiver of such standards or extension of any amortization
      period is sought or granted under section 412 of the Code, (ii) a notice
      of intent to terminate any Plan shall have been or is reasonably
      expected to be filed with the PBGC or the PBGC shall have instituted
      proceedings under ERISA section 4042 to terminate or appoint a trustee
      to administer any Plan or the PBGC shall have notified the Company or
      any ERISA Affiliate that a Plan may become a subject of any such
      proceedings, (iii) the aggregate “amount of unfunded benefit
      liabilities” (within the meaning of section 4001(a)(18) of ERISA) under
      all Plans, determined in accordance with Title IV of ERISA, shall exceed
      $5,000,000, (iv) the Company or any ERISA Affiliate shall have incurred
      or is reasonably expected to incur any liability pursuant to Title I or
      IV of ERISA or the penalty or excise tax provisions of the Code relating
      to employee benefit plans, (v) the Company or any ERISA Affiliate
      withdraws from any Multiemployer Plan, or (vi) the Company or any
      Subsidiary establishes or amends any employee welfare benefit plan that
      provides post-employment welfare benefits in a manner that would
      increase the liability of the Company or any Subsidiary thereunder; and
      any such event or events described in clauses (i) through (vi) above,
      either individually or together with any other such event or events,
      could reasonably be expected to have a Material Adverse Effect.
    

    
      
        

        

      

      
        
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      As used in Section 11(j), the terms “employee benefit plan”
      and “employee welfare benefit plan” shall have the
      respective meanings assigned to such terms in section 3 of ERISA.
    

    
      SECTION 12.            REMEDIES ON DEFAULT, ETC.
    

    
                      Section 12.1. Acceleration.  (a) If
      an Event of Default with respect to the Company described in paragraph
      (g) or (h) of Section 11 has occurred, all the Notes then outstanding
      shall automatically become immediately due and payable.
    

    
               (b) If any other Event of Default has occurred and is
      continuing, any holder or holders of more than 35% in principal amount
      of the Notes at the time outstanding may at any time at its or their
      option, by notice or notices to the Company, declare all the Notes then
      outstanding to be immediately due and payable.
    

    
               (c) If any Event of Default described in Section 11(a) or (b)
      has occurred and is continuing, any holder or holders of Notes at the
      time outstanding affected by such Event of Default may at any time, at
      its or their option, by notice or notices to the Company, declare all
      the Notes held by it or them to be immediately due and payable.
    

    
        Upon any Note’s becoming due and payable under this Section 12.1,
      whether automatically or by declaration, such Notes will forthwith
      mature and the entire unpaid principal amount of such Notes, plus (x)
      all accrued and unpaid interest thereon (including, but not limited to,
      interest accrued thereon at the Default Rate) and (y) the Make-Whole
      Amount determined in respect of such principal amount (to the full
      extent permitted by applicable law), shall all be immediately due and
      payable, in each and every case without presentment, demand, protest or
      further notice, all of which are hereby waived.  The Company
      acknowledges, and the parties hereto agree, that each holder of a Note
      has the right to maintain its investment in the Notes free from
      repayment by the Company (except as herein specifically provided for)
      and that the provision for payment of a Make-Whole Amount by the Company
      in the event that the Notes are prepaid or are accelerated as a result
      of an Event of Default, is intended to provide compensation for the
      deprivation of such right under such circumstances.
    

    
      
        

        

      

      
        
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                      Section 12.2. Other Remedies.  If
      any Default or Event of Default has occurred and is continuing, and
      irrespective of whether any Notes have become or have been declared
      immediately due and payable under Section 12.1, the holder of any Note
      at the time outstanding may proceed to protect and enforce the rights of
      such holder by an action at law, suit in equity or other appropriate
      proceeding, whether for the specific performance of any agreement
      contained herein or in any Note, or for an injunction against a
      violation of any of the terms hereof or thereof, or in aid of the
      exercise of any power granted hereby or thereby or by law or otherwise.
    

    
                      Section 12.3. Rescission.  At
      any time after any Notes have been declared due and payable pursuant to
      Section 12.1(b) or (c), the holders of not less than 66-2/3% in
      principal amount of the Notes then outstanding, by written notice to the
      Company, may rescind and annul any such declaration and its consequences
      if (a) the Company has paid all overdue interest on the Notes, all
      principal of and Make-Whole Amount, if any, on any Notes that are due
      and payable and are unpaid other than by reason of such declaration, and
      all interest on such overdue principal and Make-Whole Amount, if any,
      and (to the extent permitted by applicable law) any overdue interest in
      respect of the Notes, at the Default Rate, (b) all Events of Default and
      Defaults, other than non-payment of amounts that have become due solely
      by reason of such declaration, have been cured or have been waived
      pursuant to Section 17, and (c) no judgment or decree has been entered
      for the payment of any monies due pursuant hereto or to the Notes.  No
      rescission and annulment under this Section 12.3 will extend to or
      affect any subsequent Event of Default or Default or impair any right
      consequent thereon.
    

    
                     Section 12.4. No Waivers or Election of Remedies,
      Expenses, Etc.  No course of dealing and no delay on the part of any
      holder of any Note in exercising any right, power or remedy shall
      operate as a waiver thereof or otherwise prejudice such holder’s rights,
      powers or remedies.  No right, power or remedy conferred by this
      Agreement or by any Note upon any holder thereof shall be exclusive of
      any other right, power or remedy referred to herein or therein or now or
      hereafter available at law, in equity, by statute or otherwise.  Without
      limiting the obligations of the Company under Section 15, the Company
      will pay to the holder of each Note on demand such further amount as
      shall be sufficient to cover all costs and expenses of such holder
      incurred in any enforcement or collection under this Section 12,
      including, without limitation, reasonable attorneys’ fees, expenses and
      disbursements.
    

    
      SECTION 13.            REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.
    

    
                Section 13.1. Registration of Notes.  The
      Company shall keep at its principal executive office a register for the
      registration and registration of transfers of Notes.  The name and
      address of each holder of one or more Notes, each transfer thereof and
      the name and address of each transferee of one or more Notes shall be
      registered in such register.  Prior to due presentment for registration
      of transfer, the Person in whose name any Note shall be registered shall
      be deemed and treated as the owner and holder thereof for all purposes
      hereof, and the Company shall not be affected by any notice or knowledge
      to the contrary.  The Company shall give to any holder of a Note that is
      an Institutional Investor promptly upon request therefor, a complete and
      correct copy of the names and addresses of all registered holders of
      Notes.
    

    
      
        

        

      

      
        
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                Section 13.2. Transfer and Exchange of Notes.  Upon
      surrender of any Note to the Company at the address and to the attention
      of the designated officer (all as specified in Section 18(iii)), for
      registration of transfer or exchange (and in the case of a surrender for
      registration of transfer accompanied by a written instrument of transfer
      duly executed by the registered holder of such Note or such holder’s
      attorney duly authorized in writing and accompanied by the relevant
      name, address and other information for notices of each transferee of
      such Note or part thereof), within 30 days thereafter, the Company shall
      execute and deliver, at the Company’s expense (except as provided
      below), one or more new Notes (as requested by the holder thereof) in
      exchange therefor, in an aggregate principal amount equal to the unpaid
      principal amount of the surrendered Note.  Each such new Note shall be
      payable to such Person as such holder may request and shall be
      substantially in the form of Exhibit 1.  Each such new Note shall be
      dated and bear interest from the date to which interest shall have been
      paid on the surrendered Note or dated the date of the surrendered Note
      if no interest shall have been paid thereon.  The Company may require
      payment of a sum sufficient to cover any stamp tax or governmental
      charge imposed in respect of any such transfer of Notes.  Notes shall
      not be transferred in denominations of less than $100,000, provided that
      if necessary to enable the registration of transfer by a holder of its
      entire holding of Notes, one Note may be in a denomination of less than
      $100,000.  Any transferee, by its acceptance of a Note registered in its
      name (or the name of its nominee), shall be deemed to have made the
      representation set forth in Section 6.2.
    

    
                      Section 13.3. Replacement of Notes.  Upon
      receipt by the Company at the address and to the attention of the
      designated officer (all as specified in Section 18(iii)) of evidence
      reasonably satisfactory to it of the ownership of and the loss, theft,
      destruction or mutilation of any Note (which evidence shall be, in the
      case of an Institutional Investor, notice from such Institutional
      Investor of such ownership and such loss, theft, destruction or
      mutilation), and
    

    
                           (a) in the case of loss, theft or destruction, of
      indemnity reasonably satisfactory to it (provided that if the holder of
      such Note is, or is a nominee for, an original Purchaser or another
      holder of a Note with a minimum net worth of at least $100,000,000 or a
      Qualified Institutional Buyer, such Person’s own unsecured agreement of
      indemnity shall be deemed to be satisfactory), or
    

    
                           (b) in the case of mutilation, upon surrender and
      cancellation thereof,
    

    
      within 30 days thereafter, the Company at its own expense shall execute
      and deliver, in lieu thereof, a new Note, dated and bearing interest
      from the date to which interest shall have been paid on such lost,
      stolen, destroyed or mutilated Note or dated the date of such lost,
      stolen, destroyed or mutilated Note if no interest shall have been paid
      thereon.
    

    
      
        

        

      

      
        
          36
        

        
          


        

      

      
        

        

      

    

    

    

    
      SECTION 14.            PAYMENTS ON NOTES.
    

    
                Section 14.1. Place of Payment.  Subject
      to Section 14.2, payments of principal, Make-Whole Amount, if any, and
      interest becoming due and payable on the Notes shall be made in the
      Borough of Manhattan, City and State of New York, at the principal
      office of JPMorgan Chase Bank, N.A. in such jurisdiction.  The Company
      may at any time, by notice to each holder of a Note, change the place of
      payment of the Notes so long as such place of payment shall be either
      the principal office of the Company in such jurisdiction or the
      principal office of a bank or trust company in such jurisdiction.
    

    
                Section 14.2. Home Office Payment.  So
      long as any Purchaser or its nominee shall be the holder of any Note,
      and notwithstanding anything contained in Section 14.1 or in such Note
      to the contrary, the Company will pay all sums becoming due on such Note
      for principal, Make-Whole Amount, if any, and interest by the method and
      at the address specified for such purpose below such Purchaser’s name in
      Schedule A, or by such other method or at such other address as such
      Purchaser shall have from time to time specified to the Company in
      writing for such purpose, without the presentation or surrender of such
      Note or the making of any notation thereon, except that upon written
      request of the Company made concurrently with or reasonably promptly
      after payment or prepayment in full of any Note, such Purchaser shall
      surrender such Note for cancellation, reasonably promptly after any such
      request, to the Company at its principal executive office or at the
      place of payment most recently designated by the Company pursuant to
      Section 14.1.  Prior to any sale or other disposition of any Note held
      by a Purchaser or its nominee, such Purchaser will, at its election,
      either endorse thereon the amount of principal paid thereon and the last
      date to which interest has been paid thereon or surrender such Note to
      the Company in exchange for a new Note or Notes pursuant to Section
      13.2.  The Company will afford the benefits of this Section 14.2 to any
      Institutional Investor that is the direct or indirect transferee of any
      Note purchased by a Purchaser under this Agreement and that has made the
      same agreement relating to such Note as the Purchasers have made in this
      Section 14.2.
    

    
      SECTION 15.            EXPENSES, ETC.
    

    
                Section 15.1. Transaction Expenses.  Whether
      or not the transactions contemplated hereby are consummated, the Company
      will pay all costs and expenses (including reasonable attorneys’ fees of
      a special counsel and, if reasonably required by the Required Holders,
      local or other counsel) incurred by the Purchasers and each other holder
      of a Note in connection with such transactions and in connection with
      any amendments, waivers or consents under or in respect of this
      Agreement or the Notes (whether or not such amendment, waiver or consent
      becomes effective), including, without limitation: (a) the costs and
      expenses incurred in enforcing or defending (or determining whether or
      how to enforce or defend) any rights under this Agreement or the Notes
      or in responding to any subpoena or other legal process or informal
      investigative demand issued in connection with this Agreement or the
      Notes, or by reason of being a holder of any Note, (b) the costs and
      expenses, including financial advisors’ fees, incurred in connection
      with the insolvency or bankruptcy of the Company or any Subsidiary or in
      connection with any work-out or restructuring of the transactions
      contemplated hereby and by the Notes and (c) the costs and expenses
      incurred in connection with the initial filing of this Agreement and all
      related documents and financial information with the SVO provided,
      that such costs and expenses under this clause (c) shall not exceed
      $3,000.  The Company will pay, and will save each Purchaser and each
      other holder of a Note harmless from, all claims in respect of any fees,
      costs or expenses, if any, of brokers and finders (other than those, if
      any, retained by a Purchaser or other holder in connection with its
      purchase of the Notes).
    

    
      
        

        

      

      
        
          37
        

        
          


        

      

      
        

        

      

    

    

    

    
                Section 15.2.  Survival.  The
      obligations of the Company under this Section 15 will survive the
      payment or transfer of any Note, the enforcement, amendment or waiver of
      any provision of this Agreement or the Notes, and the termination of
      this Agreement.
    

    
      SECTION 16.            SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
      ENTIRE AGREEMENT.
    

    
      All representations and warranties contained herein shall survive the
      execution and delivery of this Agreement and the Notes, the purchase or
      transfer by any Purchaser of any Note or portion thereof or interest
      therein and the payment of any Note, and may be relied upon by any
      subsequent holder of a Note, regardless of any investigation made at any
      time by or on behalf of such Purchaser or any other holder of a
      Note.  All statements contained in any certificate or other instrument
      delivered by or on behalf of the Company pursuant to this
      Agreement  shall be deemed representations and warranties of the Company
      under this Agreement.  Subject to the preceding sentence, this Agreement
      and the Notes embody the entire agreement and understanding between each
      Purchaser and the Company and supersede all prior agreements and
      understandings relating to the subject matter hereof.
    

    
      SECTION 17.            AMENDMENT AND WAIVER.  
    

    
                      Section 17.1. Requirements.  This
      Agreement and the Notes may be amended, and the observance of any term
      hereof or of the Notes may be waived (either retroactively or
      prospectively), with (and only with) the written consent of the Company
      and the Required Holders, except that (a) no amendment or waiver of any
      of the provisions of Section 1, 2, 3, 4, 5, 6 or 21 hereof, or any
      defined term (as it is used therein), will be effective as to any
      Purchaser unless consented to by such Purchaser in writing, and (b) no
      such amendment or waiver may, without the written consent of the holder
      of each Note at the time outstanding affected thereby, (i) subject to
      the provisions of Section 12 relating to acceleration or rescission,
      change the amount or time of any prepayment or payment of principal of,
      or reduce the rate or change the time of payment or method of
      computation of interest or of the Make-Whole Amount on, the Notes, (ii)
      change the percentage of the principal amount of the Notes the holders
      of which are required to consent to any such amendment or waiver, or
      (iii) amend any of Sections 8, 11(a), 11(b), 12, 17 or 20.
    

    
                      Section 17.2. Solicitation of Holders of Notes.
    

    
               (a) Solicitation.
      The Company will provide each holder of the Notes (irrespective of
      the amount of Notes then owned by it) with sufficient information,
      sufficiently far in advance of the date a decision is required, to
      enable such holder to make an informed and considered decision with
      respect to any proposed amendment, waiver or consent in respect of any
      of the provisions hereof or of the Notes.  The Company will deliver
      executed or true and correct copies of each amendment, waiver or consent
      effected pursuant to the provisions of this Section 17 to each holder of
      outstanding Notes promptly following the date on which it is executed
      and delivered by, or receives the consent or approval of, the requisite
      holders of Notes.
    

    
      
        

        

      

      
        
          38
        

        
          


        

      

      
        

        

      

    

    
               (b) Payment. The
      Company will not directly or indirectly pay or cause to be paid any
      remuneration, whether by way of supplemental or additional interest, fee
      or otherwise, or grant any security or provide other credit support, to
      any holder of Notes as consideration for or as an inducement to the
      entering into by any holder of Notes of any waiver or amendment of any
      of the terms and provisions hereof unless such remuneration is
      concurrently paid, or security is concurrently granted or other credit
      support concurrently provided, on the same terms, ratably to each holder
      of Notes then outstanding even if such holder did not consent to such
      waiver or amendment.
    

    
                Section 17.3. Binding Effect, etc.  Any
      amendment or waiver consented to as provided in this Section 17 applies
      equally to all holders of Notes and is binding upon them and upon each
      future holder of any Note and upon the Company without regard to whether
      such Note has been marked to indicate such amendment or waiver.  No such
      amendment or waiver will extend to or affect any obligation, covenant,
      agreement, Default or Event of Default not expressly amended or waived
      or impair any right consequent thereon.  No course of dealing between
      the Company and the holder of any Note nor any delay in exercising any
      rights hereunder or under any Note shall operate as a waiver of any
      rights of any holder of such Note.  As used herein, the term “this
      Agreement” and references thereto shall mean this Agreement as it may
      from time to time be amended or supplemented.
    

    
                      Section 17.4. Notes Held by Company, etc.
      Solely for the purpose of determining whether the holders of the
      requisite percentage of the aggregate principal amount of Notes then
      outstanding approved or consented to any amendment, waiver or consent to
      be given under this Agreement or the Notes, or have directed the taking
      of any action provided herein or in the Notes to be taken upon the
      direction of the holders of a specified percentage of the aggregate
      principal amount of Notes then outstanding, Notes directly or indirectly
      owned by the Company or any of its Affiliates shall be deemed not to be
      outstanding.
    

    
      SECTION 18.            NOTICES.
    

    
      All notices and communications provided for hereunder shall be in
      writing and sent (a) by telecopy if the sender on the same day sends a
      confirming copy of such notice by a recognized overnight delivery
      service (charges prepaid), or (b) by registered or certified mail with
      return receipt requested (postage prepaid), or (c) by a recognized
      overnight delivery service (with charges prepaid).  Any such notice must
      be sent:
    

    
                           (i) if to any Purchaser or its nominee, to such
      Purchaser or nominee at the address specified for such communications in
      Schedule A, or at such other address as such Purchaser or nominee shall
      have specified to the Company in writing,
    

    
                          (ii) if to any other holder of any Note, to such
      holder at such address as such other holder shall have specified to the
      Company in writing, or
    

    
      
        

        

      

      
        
          39
        

        
          


        

      

      
        

        

      

    

    
                         (iii) if to the Company, to the Company at its
      address set forth at the beginning hereof to the attention of its Chief
      Financial Officer, or at such other address as the Company shall have
      specified to the holder of each Note in writing.
    

    
      Notices under this Section 18 will be deemed given only when actually
      received.
    

    
      SECTION 19.            REPRODUCTION OF DOCUMENTS.
    

    
      This Agreement and all documents relating thereto, including, without
      limitation, (a) consents, waivers and modifications that may hereafter
      be executed, (b) documents received by any Purchaser at the Closing
      (except the Notes themselves), and (c) financial statements,
      certificates and other information previously or hereafter furnished to
      any Purchaser, may be reproduced by such Purchaser by any photographic,
      photostatic, electronic, digital, or other similar process and such
      Purchaser may destroy any original document so reproduced.  The Company
      agrees and stipulates that, to the extent permitted by applicable law,
      any such reproduction shall be admissible in evidence as the original
      itself in any judicial or administrative proceeding (whether or not the
      original is in existence and whether or not such reproduction was made
      by such Purchaser in the regular course of business) and any
      enlargement, facsimile or further reproduction of such reproduction
      shall likewise be admissible in evidence.  This Section 19 shall not
      prohibit the Company or any other holder of Notes from contesting any
      such reproduction to the same extent that it could contest the original,
      or from introducing evidence to demonstrate the inaccuracy of any such
      reproduction.
    

    
      SECTION 20.            CONFIDENTIAL INFORMATION.
    

    
      For the purposes of this Section 20, “Confidential Information” means
      information delivered to any Purchaser by or on behalf of the Company or
      any Subsidiary in connection with the transactions contemplated by or
      otherwise pursuant to this Agreement that is proprietary in nature and
      that was clearly marked or labeled or otherwise adequately identified
      when received by such Purchaser as being confidential information of the
      Company or such Subsidiary, provided that such term does not include
      information that (a) was publicly known or otherwise known to such
      Purchaser prior to the time of such disclosure, (b) subsequently becomes
      publicly known through no act or omission by such Purchaser or any
      person acting on such Purchaser’s behalf, (c) otherwise becomes known to
      such Purchaser other than through disclosure by the Company or any
      Subsidiary or (d) constitutes financial statements delivered to such
      Purchaser under Section 7.1 that are otherwise publicly available.  Each
      Purchaser will maintain the confidentiality of such Confidential
      Information in accordance with procedures adopted by such Purchaser in
      good faith to protect confidential information of third parties
      delivered to such Purchaser, provided that such Purchaser may deliver or
      disclose Confidential Information to (i) its directors, officers,
      employees, agents, attorneys, trustees and affiliates (to the extent
      such disclosure reasonably relates to the administration of the
      investment represented by its Notes), (ii) its financial advisors and
      other professional advisors who agree to hold confidential the
      Confidential Information substantially in accordance with the terms of
      this Section 20, (iii) any other holder of any Note, (iv) any
      Institutional Investor to which it sells or offers to sell such Note or
      any part thereof or any participation therein (if such Person has agreed
      in writing prior to its receipt of such Confidential Information to be
      bound by the provisions of this Section 20), (v) any Person from which
      it offers to purchase any security of the Company (if such Person has
      agreed in writing prior to its receipt of such Confidential Information
      to be bound by the provisions of this Section 20), (vi) any federal or
      state regulatory authority having jurisdiction over such Purchaser,
      (vii) the NAIC or the SVO or, in each case, any similar organization, or
      any nationally recognized rating agency that requires access to
      information about such Purchaser’s investment portfolio, or (viii) any
      other Person to which such delivery or disclosure may be necessary or
      appropriate (w) to effect compliance with any law, rule, regulation or
      order applicable to such Purchaser, (x) in response to any subpoena or
      other legal process, (y) in connection with any litigation to which such
      Purchaser is a party or (z) if an Event of Default has occurred and is
      continuing, to the extent such Purchaser may reasonably determine such
      delivery and disclosure to be necessary or appropriate in the
      enforcement or for the protection of the rights and remedies under such
      Purchaser’s Notes and this Agreement.  Each holder of a Note, by its
      acceptance of a Note, will be deemed to have agreed to be bound by and
      to be entitled to the benefits of this Section 20 as though it were a
      party to this Agreement.  On reasonable request by the Company in
      connection with the delivery to any holder of a Note of information
      required to be delivered to such holder under this Agreement or
      requested by such holder (other than a holder that is a party to this
      Agreement or its nominee), such holder will enter into an agreement with
      the Company embodying the provisions of this Section 20.
    

    
      
        

        

      

      
        
          40
        

        
          


        

      

      
        

        

      

    

    
      SECTION 21.            SUBSTITUTION OF PURCHASER.
    

    
      Each Purchaser shall have the right to substitute any one of its
      Affiliates as the purchaser of the Notes that it has agreed to purchase
      hereunder, by written notice to the Company, which notice shall be
      signed by both such Purchaser and such Affiliate, shall contain such
      Affiliate’s agreement to be bound by this Agreement and shall contain a
      confirmation by such Affiliate of the accuracy with respect to it of the
      representations set forth in Section 6.  Upon receipt of such notice,
      any reference to such Purchaser in this Agreement (other than in this
      Section 21), shall be deemed to refer to such Affiliate in lieu of such
      original Purchaser.  In the event that such Affiliate is so substituted
      as a Purchaser hereunder and such Affiliate thereafter transfers to such
      original Purchaser all of the Notes then held by such Affiliate, upon
      receipt by the Company of notice of such transfer, any reference to such
      Affiliate as a “Purchaser” in this Agreement (other than in this Section
      21), shall no longer be deemed to refer to such Affiliate, but shall
      refer to such original Purchaser, and such original Purchaser shall
      again have all the rights of an original holder of the Notes under this
      Agreement.
    

    
      SECTION 22.            MISCELLANEOUS.
    

    
                      Section 22.1. Successors and Assigns.  All
      covenants and other agreements contained in this Agreement by or on
      behalf of any of the parties hereto bind and inure to the benefit of
      their respective successors and assigns (including, without limitation,
      any subsequent holder of a Note) whether so expressed or not.
    

    
                Section 22.2. Payments Due on Non-Business Days.  Anything
      in this Agreement or the Notes to the contrary notwithstanding (but
      without limiting the requirement in Section 8.4 that the notice of any
      optional prepayment specify a Business Day as the date fixed for such
      prepayment), any payment of principal of or Make-Whole Amount or
      interest on any Note that is due on a date other than a Business Day
      shall be made on the next succeeding Business Day without including the
      additional days elapsed in the computation of the interest payable on
      such next succeeding Business Day; provided that if the maturity date of
      any Note is a date other than a Business Day, the payment otherwise due
      on such maturity date shall be made on the next succeeding Business Day
      and shall include the additional days elapsed in the computation of
      interest payable on such next succeeding Business Day.
    

    
      
        

        

      

      
        
          41
        

        
          


        

      

      
        

        

      

    

    
                      Section 22.3. Accounting Terms.  All
      accounting terms used herein which are not expressly defined in this
      Agreement have the meanings respectively given to them in accordance
      with GAAP.  Except as otherwise specifically provided herein, (i) all
      computations made pursuant to this Agreement shall be made in accordance
      with GAAP, and (ii) all financial statements shall be prepared in
      accordance with GAAP.
    

    
         Section 22.4. Severability.  Any
      provision of this Agreement that is prohibited or unenforceable in any
      jurisdiction shall, as to such jurisdiction, be ineffective to the
      extent of such prohibition or unenforceability without invalidating the
      remaining provisions hereof, and any such prohibition or
      unenforceability in any jurisdiction shall (to the full extent permitted
      by law) not invalidate or render unenforceable such provision in any
      other jurisdiction.
    

    
                      Section 22.5. Construction, etc.  Each
      covenant contained herein shall be construed (absent express provision
      to the contrary) as being independent of each other covenant contained
      herein, so that compliance with any one covenant shall not (absent such
      an express contrary provision) be deemed to excuse compliance with any
      other covenant.  Where any provision herein refers to action to be taken
      by any Person, or which such Person is prohibited from taking, such
      provision shall be applicable whether such action is taken directly or
      indirectly by such Person.
    

    
      For the avoidance of doubt, all Schedules and Exhibits attached to this
      Agreement shall be deemed to be a part hereof.
    

    
                      Section 22.6. Counterparts.  This
      Agreement may be executed in any number of counterparts, each of which
      shall be an original but all of which together shall constitute one
      instrument.  Each counterpart may consist of a number of copies hereof,
      each signed by less than all, but together signed by all, of the parties
      hereto.
    

    
                      Section 22.7. Governing Law.  This
      Agreement shall be construed and enforced in accordance with, and the
      rights of the parties shall be governed by, the law of the State of New
      York excluding choice-of-law principles of the law of such State that
      would permit the application of the laws of a jurisdiction other than
      such State.
    

    
                      Section 22.8. Jurisdiction and Process; Waiver of
      Jury Trial.  (a) The Company irrevocably submits to
      the non-exclusive jurisdiction of any New York State or federal court
      sitting in the Borough of Manhattan, The City of New York, over any
      suit, action or proceeding arising out of or relating to this Agreement
      or the Notes.  To the fullest extent permitted by applicable law, the
      Company irrevocably waives and agrees not to assert, by way of motion,
      as a defense or otherwise, any claim that it is not subject to the
      jurisdiction of any such court, any objection that it may now or
      hereafter have to the laying of the venue of any such suit, action or
      proceeding brought in any such court and any claim that any such suit,
      action or proceeding brought in any such court has been brought in an
      inconvenient forum.
    

    
      
        

        

      

      
        
          42
        

        
          


        

      

      
        

        

      

    

    
               (b) The Company consents to process being served by or on
      behalf of any holder of Notes in any suit, action or proceeding of the
      nature referred to in Section 22.8(a) by mailing a copy thereof by
      registered or certified mail (or any substantially similar form of
      mail), postage prepaid, return receipt requested, to it at its address
      specified in Section 18 or at such other address of which such holder
      shall then have been notified pursuant to said Section.  The Company
      agrees that such service upon receipt (i) shall be deemed in every
      respect effective service of process upon it in any such suit, action or
      proceeding and (ii) shall, to the fullest extent permitted by applicable
      law, be taken and held to be valid personal service upon and personal
      delivery to it.  Notices hereunder shall be conclusively presumed
      received as evidenced by a delivery receipt furnished by the United
      States Postal Service or any reputable commercial delivery service.
    

    
               (c) Nothing in this Section 22.8 shall affect the right of any
      holder of a Note to serve process in any manner permitted by law, or
      limit any right that the holders of any of the Notes may have to bring
      proceedings against the Company in the courts of any appropriate
      jurisdiction or to enforce in any lawful manner a judgment obtained in
      one jurisdiction in any other jurisdiction.
    

    
               (d) THE PARTIES HERETO HEREBY WAIVE TRIAL BY JURY IN ANY ACTION
      BROUGHT ON OR WITH RESPECT TO THIS AGREEMENT, THE NOTES OR ANY OTHER
      DOCUMENT EXECUTED IN CONNECTION HEREWITH OR THEREWITH.
    

    
      *    *    *    *    *
    

    

    

    
      
        

        

      

      
        
          43
        

        
          


        

      

      
        

        

      

    

    

    

    
      If you are in agreement with the foregoing, please sign the form of
      agreement on a counterpart of this Agreement and return it to the
      Company, whereupon this Agreement shall become a binding agreement
      between you and the Company.
    

    
    	
           
        	
          Very truly yours,
        
	

        	
           
        
	

        	
          CULP, INC.
        
	

        	
           
        
	

        	
          By
        	
          
            /s/ Kenneth R. Bowling
          

        
	

        	

        	
          Name: Kenneth R. Bowling
        
	

        	

        	
          Title: Vice President and Chief Financial Officer
        


    

    

    

    
      This Agreement is hereby
accepted and agreed to as
of the date
      thereof.

MUTUAL OF OMAHA INSURANCE COMPANY
    

    
    	
          By
        	
          
            /s/ Curtis R. Caldwell
          

        
	

        	
          Name: Curtis R. Caldwell
        
	

        	
          Title: Senior Vice President
        
	

        	
           
        
	

        	
           
        
	
          UNITED OF OMAHA LIFE INSURANCE COMPANY
        
	

        	
           
        
	
          By
        	
          
            /s/ Curtis R. Caldwell
          

        
	

        	
          Name: Curtis R. Caldwell
        
	

        	
          Title: Senior Vice President
        


    

    

    

    
      [Signature page to Note Purchase Agreement]
    

    
      
        

        

      

      
        

        

        
          


        

      

      
        

        

      

    

    

    

    
      CULP, INC.
    

    
      INFORMATION RELATING TO PURCHASERS
    

    
    	
          
            NAME AND ADDRESS OF PURCHASER
          

        	
          PRINCIPAL AMOUNT OF
NOTES TO BE PURCHASED
        
	

        	
           
        
	
          
            MUTUAL OF OMAHA INSURANCE COMPANY
          

          
            Mutual of Omaha Plaza
          

          
            Omaha, Nebraska 68175-1011
          

          
            Attention: 4-Investment Accounting
          

        	
          $3,000,000
        


    

    
      Payments
    

    
      All principal and interest payments on the Notes shall be made by wire
      transfer of immediately available funds to:
    

    
      JPMorgan Chase Bank
ABA #021000021
Private Income Processing
    

    
      For credit to:  Mutual of Omaha Insurance Company
Account #
      900-9000200
a/c:  G07096
Cusip/PPN:  230215 B#1
Interest
      Amount:  __________________________
Principal
      Amount:  _________________________
    

    
      Notices
    

    
      Address for all notices in respect of payment of principal and interest,
      corporate actions, and reorganization notifications:
    

    
      JPMorgan Chase Bank
14201 Dallas Parkway, 13th Floor
Dallas,
      Texas  75254-2917
Attention: Income Processing - G. Ruiz
a/c:  G07096
    

    
      All other notices and communications (i.e.:  quarterly/annual reports,
      tax filings, modifications, waivers regarding the Note Purchase
      Agreement or Notes) to be addressed as first provided above.
    

    
      Name of Nominee in which Notes are to be issued:  None
    

    
      Taxpayer I.D. Number:  47-0246511
    

    
      SCHEDULE A
(to Note Purchase Agreement)
    

    
      
        

        

      

      
        

        

        
          


        

      

      
        

        

      

    

    
    	
          
            NAME AND ADDRESS OF PURCHASER
          

        	
          PRINCIPAL AMOUNT OF
NOTES TO BE PURCHASED
        
	

        	
           
        
	
          UNITED OF OMAHA LIFE INSURANCE COMPANY

          
            Mutual of Omaha Plaza
          

          
            Omaha, Nebraska 68175-1011
          

          
            Attention: 4-Investment Accounting
          

        	
          $8,000,000
        


    

    
      Payments
    

    
      All principal and interest payments on the Notes shall be made by wire
      transfer of immediately available funds to:
    

    
      JPMorgan Chase Bank
ABA #021000021
Private Income Processing
For
      credit to:  United of Omaha Life Insurance Company
Account
      # 900-9000200
a/c:  G07097
Cusip/PPN:  230215 B#1
Interest
      Amount:  __________________________
Principal
      Amount:  _________________________
    

    
      Notices
    

    
      Address for all notices in respect of payment of principal and interest,
      corporate actions, and reorganization notifications:
    

    
      JPMorgan Chase Bank
14201 Dallas Parkway, 13th Floor
Dallas,
      Texas  75254-2917
Attention: Income Processing - G. Ruiz
a/c:  G07097
    

    
      All other notices and communications (i.e.:  quarterly/annual reports,
      tax filings, modifications, waivers regarding the Note Purchase
      Agreement or Notes) to be addressed as first provided above.
    

    
      Name of Nominee in which Notes are to be issued:  None
    

    
      Taxpayer I.D. Number:  47-0322111
    

    
      A-2-
    

    
      
        

        

      

      
        

        

        
          


        

      

      
        

        

      

    

    

    

    
      DEFINED TERMS
    

    
      As used herein, the following terms have the respective meanings set
      forth below or set forth in the Section hereof following such term:
    

    
      “1998 Noteholders” means the holders of the 1998
      Notes.
    

    
      “1998 Notes” means the “Notes” as
      such term is defined in the 1998 Note Agreement.
    

    
      “1998 Note Agreement” means those certain Note
      Purchase Agreements, dated as of March 4, 1998, by and between the
      Company and the purchasers party thereto, as the same have been and may
      be amended from time to time.
    

    
      “Affiliate” means, at any time, and with
      respect to any Person, any other Person that at such time directly or
      indirectly through one or more intermediaries Controls, or is Controlled
      by, or is under common Control with, such first Person, and, with
      respect to the Company, shall include any Person beneficially owning or
      holding, directly or indirectly, 10% or more of any class of voting or
      equity interests of the Company or any Subsidiary or any corporation of
      which the Company and its Subsidiaries beneficially own or hold, in the
      aggregate, directly or indirectly, 10% or more of any class of voting or
      equity interests.  As used in this definition, “Control”
      means the possession, directly or indirectly, of the power to direct or
      cause the direction of the management and policies of a Person, whether
      through the ownership of voting securities, by contract or otherwise.
      Unless the context otherwise clearly requires, any reference to an
      “Affiliate” is a reference to an Affiliate of the Company.
    

    
      “Anti-Terrorism Order” means Executive Order No.
      13,224 of September 24, 2001, Blocking Property and Prohibiting
      Transactions with Persons Who Commit, Threaten to Commit or Support
      Terrorism, 66 U.S. Fed. Reg. 49, 079 (2001), as amended.
    

    
      “Asset Disposition” means any Transfer except:
    

    
                           (a) any Transfer from a Subsidiary to the Company
      or a Wholly-Owned Subsidiary so long as immediately before and
      immediately after the consummation of any such Transfer and after giving
      effect thereto, no Default or Event of Default exists;
    

    
                           (b) any sale of real estate, machinery and
      equipment in connection with the closure of the Company’s upholstery
      fabric plant located in Anderson, South Carolina; (ii) the sale of the
      Company’s corporate headquarters located in High Point, North Carolina;
      and (iii) the disposition of assets described (as of December 6, 2006)
      on the Company’s balance sheet as “Assets Held For Sale”; and
    

    
                           (c) any Transfer made in the ordinary course of
      business and involving only property that is either (i) inventory held
      for sale or (ii) equipment, fixtures, supplies or materials no longer
      required in the operation of the business of the Company or any of its
      Subsidiaries or that is obsolete.
    

    
      
        

        

      

      
        

        

        
          


        

      

      
        

        

      

    

    
      “B&H Acquisition” means the Company’s purchase of
      certain assets and the assumption of certain liabilities of Bodet &
      Horst USA, L.P., a New York limited partnership, which assets and
      liabilities relate to the seller’s business of the manufacture and sale
      of running meters of certain textiles, in the United States, Canada and
      Mexico pursuant to the terms of the Purchase Agreement.
    

    
      “Business Day” means (a) for the purposes of Section
      8.7 only, any day other than a Saturday, a Sunday or a day on which
      commercial banks in New York City are required or authorized to be
      closed, and (b) for the purposes of any other provision of this
      Agreement, any day other than a Saturday, a Sunday or a day on which
      commercial banks in New York, New York or Charlotte, North Carolina are
      required or authorized to be closed.
    

    
      “Capital Lease” means, at any time, a lease with
      respect to which the lessee is required concurrently to recognize the
      acquisition of an asset and the incurrence of a liability in accordance
      with GAAP.
    

    
      “Change in Control” has the meaning set forth in
      Section 8.2.
    

    
      “Closing” is defined in Section 3.
    

    
      “Code” means the Internal Revenue Code of
      1986, as amended from time to time, and the rules and regulations
      promulgated thereunder from time to time.
    

    
      “Company” means Culp, Inc., a North Carolina
      corporation or any successor that becomes such in the manner prescribed
      in Section 10.4.
    

    
      “Confidential Information” is defined in Section 20.
    

    
      “Consolidated Assets” means, at any time, the total
      assets of the Company and its Subsidiaries which would be shown as
      assets on a consolidated balance sheet of the Company and its
      Subsidiaries as of such time prepared in accordance with GAAP, after
      eliminating all amounts properly attributable to minority interests, if
      any, in the stock and surplus of Subsidiaries.
    

    
      “Consolidated EBITDA” means, with reference to any
      period, the sum of (i) all Consolidated Net Income, (ii) Interest
      Expense, income tax expense, depreciation and amortization expense of
      the Company and its Subsidiaries for such period (taken as a cumulative
      whole), as determined in accordance with GAAP, after eliminating all
      offsetting debits and credits between the Company and its Subsidiaries
      and all other items required to be eliminated in the course of the
      preparation of consolidated financial statements of the Company and its
      Subsidiaries in accordance with GAAP, in each case for such period, and
      (iii) Restructuring Charges for such period, to the extent such charges
      were deducted when calculating Consolidated Net Income.  In addition, in
      order to give effect to the B&H Acquisition on a pro forma basis,
      the following amounts shall be added to Consolidated EBITDA for the
      quarterly periods set forth below:
    

    
      
        

        

      

      
        

        

        
          


        

      

      
        

        

      

    

    
    	
          
            Quarterly Period Ending
          

        	
          
            Amount to be added to 
          

          
            Consolidated EBITDA
          

        
	
          October 28, 2007
        	
          $875,000
        
	
          January 27, 2008
        	
          $520,000
        
	
          April 27, 2008
        	
          $885,000
        
	
          August 3, 2008
        	
          $720,000
        


    

    
      “Consolidated EBITDAR” means, with reference to any
      period, the sum of (i) Consolidated EBITDA, plus (ii) Operating Lease
      Rentals (excluding Expensed Lease Rentals), in each case, for such
      period.
    

    
      “Consolidated Fixed Charges” means, with reference to
      any period, the sum of (i) the Interest Expense of the Company and its
      Subsidiaries for such period (taken as a cumulative whole), in each case
      as determined in accordance with GAAP, after eliminating all offsetting
      debits and credits between the Company and its Subsidiaries and all
      other items required to be eliminated in the course of the preparation
      of consolidated financial statements of the Company and its Subsidiaries
      in accordance with GAAP plus (ii) Operating Lease Rentals (excluding
      Expensed Lease Rentals) in each case for such period.
    

    
      “Consolidated Net Income” means, with reference to
      any period, the net income (or loss) of the Company and its Subsidiaries
      for such period (taken as a cumulative whole), as determined in
      accordance with GAAP, after eliminating all offsetting debits and
      credits between the Company and its Subsidiaries and all other items
      required to be eliminated in the course of the preparation of
      consolidated financial statements of the Company and its Subsidiaries in
      accordance with GAAP, provided that there shall be excluded:
    

    
                           (a )the income (or loss) of any Person accrued
      prior to the date it becomes a Subsidiary or is merged into or
      consolidated with the Company or a Subsidiary, and the income (or loss)
      of any Person, substantially all of the assets of which have been
      acquired in any manner, realized by such other Person prior to the date
      of acquisition,
    

    
                           (b) the income (or loss) of any Person (other than
      a Subsidiary) in which the Company or any Subsidiary has an ownership
      interest, except to the extent that any such income has been actually
      received by the Company or such Subsidiary in the form of cash dividends
      or similar cash distributions,
    

    
                           (c) the undistributed earnings of any Subsidiary to
      the extent that the declaration or payment of dividends or similar
      distributions by such Subsidiary is not at the time permitted by the
      terms of its charter or any agreement, instrument, judgment, decree,
      order, statute, rule or governmental regulation applicable to such
      Subsidiary,
    

    
                           (d) any restoration to income of any contingency
      reserve, except to the extent that provision for such reserve was made
      out of income accrued during such period,
    

    
      
        

        

      

      
        

        

        
          


        

      

      
        

        

      

    

    
                           (e) any aggregate net gain (but not any aggregate
      net loss) during such period arising from the sale, conversion, exchange
      or other disposition of capital assets (such term to include, without
      limitation, (i) all non-current assets and, without duplication,
      (ii) the following, whether or not current:  all fixed assets, whether
      tangible or intangible, all inventory sold in conjunction with the
      disposition of fixed assets, and all Securities),
    

    
                           (f) any gains resulting from any write-up of any
      assets (but not any loss resulting from any write-down of any assets),
    

    
                           (g) any net gain from the collection of the
      proceeds of life insurance policies,
    

    
                           (h) any gain arising from the acquisition of any
      Security, or the extinguishment, under GAAP, of any Indebtedness, of the
      Company or any Subsidiary,
    

    
                           (i) any net income or gain (but not any net loss)
      during such period from (i) any change in accounting principles in
      accordance with GAAP, (ii) any prior period adjustments resulting from
      any change in accounting principles in accordance with GAAP, (iii) any
      extraordinary items, or (iv) any discontinued operations or the
      disposition thereof,
    

    
                           (j) any deferred credit representing the excess of
      equity in any Subsidiary at the date of acquisition over the cost of the
      investment in such Subsidiary,
    

    
                           (k) in the case of a successor to the Company by
      consolidation or merger or as a transferee of its assets, any earnings
      of the successor corporation prior to such consolidation, merger or
      transfer of assets, and
    

    
                           (l) any portion of such net income that cannot be
      freely converted into United States Dollars.
    

    
      “Consolidated Net Worth” means, at any time,
    

    
                           (a) the sum of (i) the par value (or value stated
      on the books of the corporation) of the capital stock (but excluding
      Redeemable Preferred Stock, treasury stock and capital stock subscribed
      but unissued) of the Company and its Subsidiaries, plus (ii) the amount
      of paid-in capital and retained earnings of the Company and its
      Subsidiaries, plus (iii) the amount equal to all Restructuring Charges
      for all completed fiscal quarters, commencing with the fiscal quarter
      ended August 3, 2008, in each case as such amounts would be shown on
      consolidated financial statements of the Company and its Subsidiaries as
      prepared in accordance with GAAP, minus
    

    
                           (b) to the extent included in clause (a), all
      amounts properly attributable to minority interests, if any, in the
      stock and surplus of Subsidiaries.
    

    
      
        

        

      

      
        

        

        
          


        

      

      
        

        

      

    

    
      “Consolidated Total Debt” means, as of any date of
      determination, all Indebtedness of the Company and its Subsidiaries
      outstanding on such date, after eliminating all offsetting debits and
      credits between the Company and its Subsidiaries and all other items
      required to be eliminated in the course of the preparation of
      consolidated financial statements of the Company and its Subsidiaries in
      accordance with GAAP, provided, that solely for purposes of
      Section 10.2(a), Consolidated Total Debt shall exclude up to $5,000,000
      in Indebtedness of the Company and its Subsidiaries outstanding on the
      date of such determination incurred to finance the acquisition of
      equipment, which financing is obtained from or through the suppliers of
      such inventory and secured by Vendor Finance Liens permitted by
      Section 10.3(i).
    

    
      “Control Event” has the meaning set forth in
      Section 8.2
    

    
      “Credit Agreement” means that certain Amended and
      Restated Credit Agreement dated as of August 23, 2002, by and among
      Company, the lenders party thereto and Wachovia Bank, National
      Association, as Agent, as the same has been and may be amended,
      restated, replaced or otherwise modified from time to time.
    

    
      “Default” means an event or condition the occurrence
      or existence of which would, with the lapse of time or the giving of
      notice or both, become an Event of Default.
    

    
      “Default Rate” means that rate of interest that is
      the greater of (i) 10.01% per annum or (ii) 2% over the rate of interest
      publicly announced from time to time by JPMorgan Chase Bank, N.A. in New
      York, New York, as its “base” or “prime” rate.
    

    
      “Disposition Value” means, at any time, with respect
      to any property
    

    
                           (a) in the case of property that does not
      constitute Subsidiary Stock, the book value thereof, valued at the time
      of such disposition in accordance with GAAP, and
    

    
                           (b) in the case of property that constitutes
      Subsidiary Stock, an amount equal to that percentage of book value of
      the assets of the Subsidiary that issued such stock as is equal to the
      percentage that the book value of such Subsidiary Stock represents of
      the book value of all of the outstanding capital stock of such
      Subsidiary (assuming, in making such calculations, that all Securities
      convertible into such capital stock are so converted and giving full
      effect to all transactions that would occur or be required in connection
      with such conversion) determined at the time of the disposition thereof,
      in accordance with GAAP.
    

    
      “Electronic Delivery” is defined in Section 7.1(a).
    

    
      “Environmental Laws” means any and all Federal,
      state, local, and foreign statutes, laws, regulations, ordinances,
      rules, judgments, orders, decrees, permits, concessions, grants,
      franchises, licenses, agreements or governmental restrictions relating
      to pollution and the protection of the environment or the release of any
      materials into the environment, including but not limited to those
      related to Hazardous Materials.
    

    
      
        

        

      

      
        

        

        
          


        

      

      
        

        

      

    

    
      “ERISA” means the Employee Retirement Income Security
      Act of 1974, as amended from time to time, and the rules and regulations
      promulgated thereunder from time to time in effect.
    

    
      “ERISA Affiliate” means any trade or
      business  (whether or not incorporated) that is treated as a single
      employer together with the Company under section 414 of the Code.
    

    
      “Event of Default” is defined in Section 11.
    

    
      “Expensed Lease Rentals” means Operating Lease
      Rentals associated with leased properties vacated by the Company which
      have been expensed as a part of the Company’s restructuring accounting
      (and which appear on the Company’s balance sheet as a part of its
      accrued restructuring expenses), provided that, for purposes of
      covenant calculations hereunder, Expensed Lease Rentals shall not exceed
      (a) $790,000 in the aggregate for all fiscal measurement periods on or
      prior to April 27, 2008 and (b) $325,000 in the aggregate for all fiscal
      measurement periods thereafter.
    

    
      “Fair Market Value” means, at any time and with
      respect to any property, the sale value of such property that would be
      realized in an arm’s-length sale at such time between an informed and
      willing buyer and an informed and willing seller (neither being under a
      compulsion to buy or sell).
    

    
      “Form 10-K” is defined in Section 7.1(b).
    

    
      “Form 10-Q” is defined in Section 7.1(a).
    

    
      “Funded Debt” means, with respect to any Person, all
      Debt of such Person which by its terms or by the terms of any instrument
      or agreement relating thereto matures, or which is otherwise payable or
      unpaid, one year or more from, or is directly or indirectly renewable or
      extendible at the option of the obligor in respect thereof to a date one
      year or more (including, without limitation, an option of such obligor
      under a revolving credit or similar agreement obligating the lender or
      lenders to extend credit over a period of one year or more) from, the
      date of the creation thereof.
    

    
      “GAAP” means generally accepted accounting principles
      as in effect from time to time in the United States of America; provided
      that calculations made in connection with determining the covenants
      contained in Section 10 hereof, GAAP shall mean generally accepted
      accounting principals in effect in the United States as of the date of
      Closing.
    

    
      “Governmental Authority” means
    

    
                           (a)    the government of
    

    
                                     (i) the United States of America or any
      State or other political subdivision thereof, or
    

    
      
        

        

      

      
        

        

        
          


        

      

      
        

        

      

    

    
                                    (ii) any other jurisdiction in which the
      Company or any Subsidiary conducts all or any part of its business, or
      which asserts jurisdiction over any properties of the Company or any
      Subsidiary, or
    

    
                           (b) any entity exercising executive, legislative,
      judicial, regulatory or administrative functions of, or pertaining to,
      any such government.
    

    
      “Guaranty” means, with respect to any Person, any
      obligation (except the endorsement in the ordinary course of business of
      negotiable instruments for deposit or collection) of such Person
      guaranteeing or in effect guaranteeing  (whether by reason of being a
      general partner of a partnership or otherwise) any indebtedness,
      dividend or other obligation of any other Person in any manner, whether
      directly or indirectly, including (without limitation) obligations
      incurred through an agreement, contingent or otherwise, by such Person:
    

    
                           (a) to purchase such indebtedness or obligation or
      any property constituting security therefor;
    

    
                           (b) to advance or supply funds (i) for the purchase
      or payment of such indebtedness or obligation, or (ii) to maintain any
      working capital or other balance sheet condition or any income statement
      condition of any other Person or otherwise to advance or make available
      funds for the purchase or payment of such indebtedness or obligation;
    

    
                           (c) to lease properties or to purchase properties
      or services primarily for the purpose of assuring the owner of such
      indebtedness or obligation of the ability of any other Person to make
      payment of the indebtedness or obligation; or
    

    
                           (d) otherwise to assure the owner of such
      indebtedness or obligation against loss in respect thereof.
    

    
      In any computation of the indebtedness or other liabilities of the
      obligor under any Guaranty, the indebtedness or other obligations that
      are the subject of such Guaranty shall be assumed to be direct
      obligations of such obligor.
    

    
      “Hazardous Material” means any and all pollutants,
      toxic or hazardous wastes or other substances that might pose a hazard
      to health and safety, the removal of which may be required or the
      generation, manufacture, refining, production, processing, treatment,
      storage, handling, transportation, transfer, use, disposal, release,
      discharge, spillage, seepage or filtration of which is or shall be
      restricted, prohibited or penalized by any applicable law including, but
      not limited to, asbestos, urea formaldehyde foam insulation,
      polychlorinated biphenyls, petroleum, petroleum products, lead based
      paint, radon gas or similar restricted, prohibited or penalized
      substances.
    

    
      “holder” means, with respect to any Note the Person
      in whose name such Note is registered in the register maintained by the
      Company pursuant to Section 13.1.
    

    
      “Indebtedness” with respect to any Person means, at
      any time, without duplication,
    

    
      
        

        

      

      
        

        

        
          


        

      

      
        

        

      

    

    
                           (a) its liabilities for borrowed money and its
      redemption obligations in respect of mandatorily redeemable Preferred
      Stock;
    

    
                           (b) its liabilities for the deferred purchase price
      of property acquired by such Person (excluding accounts payable arising
      in the ordinary course of business but including all liabilities created
      or arising under any conditional sale or other title retention agreement
      with respect to any such property);
    

    
                           (c) (i) all liabilities appearing on its balance
      sheet in accordance with GAAP in respect of Capital Leases and (ii) all
      liabilities which would appear on its balance sheet in accordance with
      GAAP in respect of Synthetic Leases assuming such Synthetic Leases were
      accounted for as Capital Leases;
    

    
                           (d) all liabilities for borrowed money secured by
      any Lien with respect to any property owned by such Person (whether or
      not it has assumed or otherwise become liable for such liabilities);
    

    
                           (e) all its liabilities in respect of letters of
      credit or instruments serving a similar function issued or accepted for
      its account by banks and other financial institutions (whether or not
      representing obligations for borrowed money);
    

    
                           (f) the aggregate Swap Termination Value of all
      Swap Contracts of such Person; and
    

    
                           (g) any Guaranty of such Person with respect to
      liabilities of a type described in any of clauses (a) through (f)
      hereof.  
    

    
      Indebtedness of any Person shall include all obligations of such Person
      of the character described in clauses (a) through (g) to the extent such
      Person remains legally liable in respect thereof notwithstanding that
      any such obligation is deemed to be extinguished under GAAP.
    

    
      “Institutional Investor” means (a) any Purchaser of a
      Note, (b) any holder of a Note holding (together with one or more of its
      affiliates) more than 5% of the aggregate principal amount of the Notes
      then outstanding, (c) any bank, trust company, savings and loan
      association or other financial institution, any pension plan, any
      investment company, any insurance company, any broker or dealer, or any
      other similar financial institution or entity, regardless of legal form,
      and (d) any Related Fund of any holder of any Note.
    

    
      “Intercreditor Agreement” means an agreement,
      in form and substance reasonably satisfactory to the Required Holders,
      among the holders of the Notes and each creditor of the Company to which
      a Subsidiary is then becoming obligated as a co-borrower or guarantor
      giving rise the requirements of Section 9.7, providing that payments
      received from any such Subsidiary following agreed upon enforcement
      events shall be shared on an equal and ratable basis.
    

    
      
        

        

      

      
        

        

        
          


        

      

      
        

        

      

    

    
      “Interest Expense” of the Company and its
      Subsidiaries for any period shall mean all interest (including the
      imputed interest component on Rentals on Capital Leases) and all
      amortization of debt discount and expense on any particular Indebtedness
      (including, without limitation, payment-in-kind, zero coupon and other
      like Securities) for which such calculations are being
      made.  Computations of Interest Expense on a pro forma
      basis for Indebtedness having a variable interest rate shall be
      calculated at the rate in effect on the date of any determination.
    

    
      “Investment” shall have the meaning set forth in
      Section 10.10.
    

    
      “Lien” means, with respect to any Person, any
      mortgage, lien, pledge, charge, security interest or other encumbrance,
      or any interest or title of any vendor, lessor, lender or other secured
      party to or of such Person under any conditional sale or other title
      retention agreement or Capital Lease, upon or with respect to any
      property or asset of such Person (including in the case of stock,
      stockholder agreements, voting trust agreements and all similar
      arrangements).
    

    
      “Make-Whole Amount” is defined in Section 8.7.
    

    
      “Material” means material in relation to the
      business, operations, affairs, financial condition, assets, properties,
      or prospects of the Company and its Subsidiaries taken as a whole.
    

    
      “Material Adverse Effect” means a material adverse
      effect on (a) the business, operations, affairs, financial condition,
      assets or properties of the Company and its Subsidiaries taken as a
      whole, or (b) the ability of the Company to perform its obligations
      under this Agreement and the Notes, or (c) the validity or
      enforceability of this Agreement or the Notes.
    

    
      “Multiemployer Plan” means any Plan that is a
      “multiemployer plan” (as such term is defined in section 4001(a)(3) of
      ERISA).
    

    
      “NAIC” means the National Association of Insurance
      Commissioners or any successor thereto.
    

    
      “Net Proceeds Amount” means, with respect to any
      Transfer of any Property by any Person, an amount equal to the difference
      of
    

    
                           (a) the aggregate amount of the consideration
      (valued at the Fair Market Value of such consideration at the time of
      the consummation of such Transfer) received by such Person in respect of
      such Transfer, minus
    

    
                           (b) all ordinary and reasonable out-of-pocket costs
      and expenses actually incurred by such Person in connection with such
      Transfer.
    

    
      “Notes” is defined in Section 1.
    

    
      “Offering Materials” is defined in Section 5.3.
    

    
      
        

        

      

      
        

        

        
          


        

      

      
        

        

      

    

    
      “Officer’s Certificate” means a certificate of
      a Senior Financial Officer or of any other officer of the Company whose
      responsibilities extend to the subject matter of such certificate.
    

    
      “Operating Lease Rentals” means, with reference to
      any period, all fixed rents or charges (including as such all payments
      which the lessee is obligated to make on termination of the lease or
      surrender of the property) payable by the Company and its Subsidiaries
      (as lessee, sublessee, license, franchisee or the like) under all
      leases, licenses, or other agreements for the use or possession of real
      or personal property, tangible or intangible (except Capital Leases)
      having a term of more than one year (whether as an initial term or any
      extension or renewal thereof and including options to renew or extend
      any term, whether or not exercised), during such period, of the Company
      and its Subsidiaries for such period (taken as a cumulative whole), as
      determined in accordance with GAAP, after eliminating all offsetting
      debits and credits between the Company and its Subsidiaries and all
      other items required to be eliminated in the course of the preparation
      of consolidated financial statements of the Company and its Subsidiaries
      in accordance with GAAP.
    

    
      “PBGC” means the Pension Benefit Guaranty Corporation
      referred to and defined in ERISA or any successor thereto.
    

    
      “Person” means an individual, partnership,
      corporation, limited liability company, association, trust,
      unincorporated organization, business entity or Governmental Authority.
    

    
      “Plan” means an “employee benefit plan” (as defined
      in section 3(3) of ERISA) subject to Title I of ERISA that is or, within
      the preceding five years, has been established or maintained, or to
      which contributions are or, within the preceding five years, have been
      made or required to be made, by the Company or any ERISA Affiliate or
      with respect to which the Company or any ERISA Affiliate may have any
      liability.
    

    
      “Preferred Stock” means any class of capital stock of
      a Person that is preferred over any other class of capital stock (or
      similar equity interests) of such Person as to the payment of dividends
      or the payment of any amount upon liquidation or dissolution of such
      Person.
    

    
      “Priority Debt” means, without duplication, the sum
      of (i) all Indebtedness of the Company secured by any Lien with respect
      to any property owned by the Company or any of its Subsidiaries other
      than Liens permitted by paragraphs (a) through (k), both inclusive, of
      Section 10.3, (ii) all Indebtedness of Subsidiaries (except
      (x) Indebtedness held by the Company or a Wholly-Owned Subsidiary and
      (y) Guaranties and joint obligations of a Subsidiary with respect to
      Indebtedness of the Company, provided that such Subsidiary has
      delivered to the holders of the Notes a Subsidiary Guaranty and the
      other documents required by Section 9.7(b)), and (iii) Indebtedness
      described in clause (iii) of Section 10.7 attributable to a Sale and
      Leaseback Transaction involving the Company’s corporate headquarters.
    

    
      “property” or “properties” means,
      unless otherwise specifically limited, real or personal property of any
      kind, tangible or intangible, choate or inchoate.
    

    
      
        

        

      

      
        

        

        
          


        

      

      
        

        

      

    

    
      “PTE” is defined in Section 6.2(a).
    

    
      “Purchase Agreement” means that certain Asset
      Purchase Agreement dated as of August 11, 2008, by and between Company,
      Bodet & Horst USA, L.P. and Bodet & Horst GmbH & Co. KE.
    

    
      “Purchaser” is defined in the first paragraph of this
      Agreement.
    

    
      “Qualified Institutional Buyer” means any Person who
      is a “qualified institutional buyer” within the meaning of such term as
      set forth in Rule 144A(a)(1) under the Securities Act.
    

    
      “Redeemable” means, with respect to the capital stock
      of any Person, each share of such Person’s capital stock that is:
    

    
                           (a) redeemable, payable or required to be purchased
      or otherwise retired or extinguished, or convertible into Indebtedness
      of such Person (i) at a fixed or determinable date, whether by operation
      of sinking fund or otherwise, (ii) at the option of any Person other
      than such Person, or (iii) upon the occurrence of a condition not solely
      within the control of such Person; or
    

    
                           (b) convertible into other Redeemable capital stock.
    

    
      “Related Fund” means, with respect to any holder of
      any Note, any fund or entity that (i) invests in Securities or bank
      loans, and (ii) is advised or managed by such holder, the same
      investment advisor as such holder or by an affiliate of such holder or
      such investment advisor.
    

    
      “Rentals” shall mean and include as of the date of
      any determination thereof all fixed payments (including as such all
      payments which the lessee is obligated to make to the lessor on
      termination of the lease or surrender of the property) payable by the
      Company or a Subsidiary, as lessee or sublessee under a lease of real or
      personal property, but shall be exclusive of any amounts required to be
      paid by the Company or a Subsidiary (whether or not designated as rents
      or additional rents) on account of maintenance, repairs, insurance,
      taxes and similar charges.
    

    
      “Required Holders” means, at any time, the holders of
      at least 66-2/3% in principal amount of the Notes at the time
      outstanding (exclusive of Notes then owned by the Company or any of its
      Affiliates).
    

    
      “Responsible Officer” means any Senior Financial
      Officer and any other officer of the Company with responsibility for the
      administration of the relevant portion of this Agreement.
    

    
      “Restructuring Charges” means, collectively, (a) from
      and after the date of Closing through the term of this Agreement, (i) up
      to $1,000,000 in the aggregate in cash restructuring expenses and
      restructuring-related costs, and (ii) all non-cash restructuring
      expenses and restructuring-related costs, and (b) non-cash write-downs
      of deferred tax assets of the Company accounted for as “valuation
      allowances”, in each case, as such amounts would be shown on
      consolidated financial statements of the Company and its Subsidiaries as
      prepared in accordance with GAAP.  In addition, solely for the purpose
      of calculating EBITDA for determining the Company’s compliance with the
      financial covenants in Section 10.2, “Restructuring Charges” shall
      include, for the 12-month trailing period ended April 27, 2008,
      $2,900,000 in the aggregate in cash and non-cash restructuring expenses
      and restructuring-related costs.  For purposes of clarity, it is
      understood and agreed that restructuring expenses and
      restructuring-related costs, as such terms are used in this definition,
      are expenses and costs related solely to the disposal of plants and
      other tangible assets of the Company and its Subsidiaries or the
      reduction in the work force or layoffs and not to the write-off or
      write-down of assets, impaired or otherwise.
    

    
      
        

        

      

      
        

        

        
          


        

      

      
        

        

      

    

    
      “Sale and Leaseback Transaction” shall mean any
      arrangement with any Person or to which such Person is a party providing
      for the leasing by the Company or any Subsidiary of real or personal
      property which has been or is to be sold or transferred by the Company
      or any Subsidiary to any Person to which funds have been or are to be
      advanced on the security of such property or rental obligations of the
      Company or any Subsidiary.
    

    
      “SEC” shall mean the Securities and Exchange
      Commission of the United States, or any successor thereto.
    

    
      “Securities” or “Security” shall
      have the meaning specified in Section 2(1) of the Securities Act.
    

    
      “Securities Act” means the Securities Act of 1933, as
      amended from time to time, and the rules and regulations promulgated
      thereunder from time to time in effect.
    

    
      “Senior Financial Officer” means the chief financial
      officer, principal accounting officer, treasurer or comptroller of the
      Company.
    

    
      “Senior Funded Debt” means (a) any Funded Debt of the
      Company (other than Subordinated Debt) and (b) any Funded Debt of any
      Subsidiary.
    

    
      “Subordinated Debt” means any Indebtedness that is in
      any manner subordinated in right of payment or security in any respect
      to Indebtedness evidenced by the Notes.
    

    
      “Subsidiary” means, as to any Person, any other
      Person in which such first Person or one or more of its Subsidiaries or
      such first Person and one or more of its Subsidiaries owns sufficient
      equity or voting interests to enable it or them (as a group) ordinarily,
      in the absence of contingencies, to elect a majority of the directors
      (or Persons performing similar functions) of such second Person, and any
      partnership or joint venture if more than a 50% interest in the profits
      or capital thereof is owned by such first Person or one or more of its
      Subsidiaries or such first Person and one or more of its Subsidiaries
      (unless such partnership or joint venture can and does ordinarily take
      major business actions without the prior approval of such Person or one
      or more of its Subsidiaries).  Unless the context otherwise clearly
      requires, any reference to a “Subsidiary” is a reference to a Subsidiary
      of the Company.
    

    
      
        

        

      

      
        

        

        
          


        

      

      
        

        

      

    

    
      “Subsidiary Guaranty” means any Guaranty of
      the obligations of the Company under this Agreement executed by a
      Subsidiary of the Company in connection with the requirements of Section
      9.7 or otherwise, in form and substance reasonably satisfactory to the
      Required Holders, as the same has been and may be amended, restated,
      replaced or otherwise modified from time to time.
    

    
      “Subsidiary Stock” means, with respect to any Person,
      the stock (or any options or warrants to purchase stock or other
      Securities exchangeable for or convertible into stock) of any Subsidiary
      of such Person.
    

    
      “SVO” means the Securities Valuation Office of the
      NAIC or any successor to such Office.
    

    
      “Swap Contract” means (a) any and all interest rate
      swap transactions, basis swap transactions, basis swaps, credit
      derivative transactions, forward rate transactions, commodity swaps,
      commodity options, forward commodity contracts, equity or equity index
      swaps or options, bond or bond price or bond index swaps or options or
      forward foreign exchange transactions, cap transactions, floor
      transactions, currency options, spot contracts or any other similar
      transactions or any of the foregoing (including, but without limitation,
      any options to enter into any of the foregoing), and (b) any and all
      transactions of any kind, and the related confirmations, which are
      subject to the terms and conditions of, or governed by, any form of
      master agreement published by the International Swaps and Derivatives
      Association, Inc., any International Foreign Exchange Master Agreement.
    

    
      “Swap Termination Value” means, in respect of any one
      or more Swap Contracts, after taking into account the effect of any
      legally enforceable netting agreement relating to such Swap Contracts,
      (a) for any date on or after the date such Swap Contracts have been
      closed out and termination value(s) determined in accordance therewith,
      such termination value(s), and (b) for any date prior to the date
      referenced in clause (a), the amounts(s) determined as the
      mark-to-market values(s) for such Swap Contracts, as determined based
      upon one or more mid-market or other readily available quotations
      provided by any recognized dealer in such Swap Contracts.
    

    
      “Synthetic Lease” means, at any time, any lease
      (including leases that may be terminated by the lessee at any time) of
      any property (a) that is accounted for as an operating lease under GAAP
      and (b) in respect of which the lessee retains or obtains ownership of
      the property so leased for U.S. federal income tax purposes, other than
      any such lease under which such Person is the lessor.
    

    
      “Tangible Net Worth” means, at any time, Consolidated
      Net Worth, less the amount of any intangible items as determined in
      accordance with GAAP, at such time.
    

    
      “Transfer” means, with respect to any Person, any
      transaction in which such Person sells, conveys, transfers or leases (as
      lessor) any of its property, including, without limitation, Subsidiary
      Stock. For purposes of determining the application of the Net Proceeds
      Amount in respect of any Transfer, the Company may designate any
      Transfer as one or more separate Transfers each yielding a separate Net
      Proceeds Amount.  In any such case, the Disposition Value of any
      property subject to each such separate Transfer shall be determined by
      ratably allocating the aggregate Disposition Value of all property
      subject to all such separate Transfers to each such separate Transfer on
      a proportionate basis.
    

    
      
        

        

      

      
        

        

        
          


        

      

      
        

        

      

    

    
      “USA Patriot Act” means United States Public Law
      107-56, Uniting and Strengthening America by Providing Appropriate Tools
      Required to Intercept and Obstruct Terrorism (USA PATRIOT ACT) Act of
      2001, as amended from time to time, and the rules and regulations
      promulgated thereunder from time to time in effect.
    

    
      “Vendor Finance Liens” is defined in Section 10.3(i).
    

    
      “Voting Stock” shall mean Securities of any class or
      classes, the holders of which are ordinarily, in the absence of
      contingencies, entitled to elect a majority of the corporate directors
      (or Persons performing similar functions).
    

    
      “Wholly-Owned Subsidiary” means, at any time, any
      Subsidiary one hundred percent of all of the equity interests (except
      directors’ qualifying shares) and voting interests of which are owned by
      any one or more of the Company and the Company’s other Wholly-Owned
      Subsidiaries at such time.
    

    
      
        

        

      

      
        

        

        
          


        

      

      
        

        

      

    

    

    

    
      [FORM OF NOTE]
    

    
      CULP, INC.
    

    
      8.01% SENIOR NOTE DUE AUGUST 11, 2015
    

    
    	
          
            No. [_____]
          

        	
          
            [Date]
          

        
	
          
            $[_______]
          

        	
          
            PPN 230215 B#1
          

        


    

    
      FOR VALUE RECEIVED, the undersigned, Culp, Inc. (herein called the “Company”),
      a corporation organized and existing under the laws of the State of
      North Carolina, hereby promises to pay to [____________], or registered
      assigns, the principal sum of [_____________________] DOLLARS (or so
      much thereof as shall not have been prepaid) on August 11, 2015, with
      interest (computed on the basis of a 360-day year of twelve 30-day
      months) (a) on the unpaid balance hereof at the rate of 8.01% per annum
      from the date hereof, payable semiannually, on the 15th day of August
      and February in each year, commencing with the August or February next
      succeeding the date hereof, until the principal hereof shall have become
      due and payable, and (b) to the extent permitted by law, on any overdue
      payment of interest and, during the continuance of an Event of Default,
      on such unpaid balance and on any overdue payment of any Make-Whole
      Amount, at a rate per annum from time to time equal to the greater of
      (i) 10.01% or (ii) 2.0% over the rate of interest publicly announced by
      JPMorgan Chase Bank, N.A. from time to time in New York, New York as its
      “base” or “prime” rate, payable semiannually as aforesaid (or, at the
      option of the registered holder hereof, on demand).
    

    
      Payments of principal of, interest on and any Make-Whole Amount with
      respect to this Note are to be made in lawful money of the United States
      of America at the principal place of JPMorgan Chase Bank, N.A. in the
      Borough of Manhattan, City and State of New York, or at such other place
      as the Company shall have designated by written notice to the holder of
      this Note as provided in the Note Purchase Agreement referred to below.
    

    
      This Note is one of a series of Senior Notes (herein called the “Notes”)
      issued pursuant to the Note Purchase Agreement, dated as of August 11,
      2008 (as from time to time amended, the “Note Purchase Agreement”),
      between the Company and the respective Purchasers named therein and is
      entitled to the benefits thereof.  Each holder of this Note will be
      deemed, by its acceptance hereof, to have (i) agreed to the
      confidentiality provisions set forth in Section 20 of the Note Purchase
      Agreement and (ii) made the representation set forth in Section 6.2 of
      the Note Purchase Agreement.  Unless otherwise indicated, capitalized
      terms used in this Note shall have the respective meanings ascribed to
      such terms in the Note Purchase Agreement.
    

    
      This Note is a registered Note and, as provided in the Note Purchase
      Agreement, upon surrender of this Note for registration of transfer
      accompanied by a written instrument of transfer duly executed, by the
      registered holder hereof or such holder’s attorney duly authorized in
      writing, a new Note for a like principal amount will be issued to, and
      registered in the name of, the transferee.  Prior to due presentment for
      registration of transfer, the Company may treat the person in whose name
      this Note is registered as the owner hereof for the purpose of receiving
      payment and for all other purposes, and the Company will not be affected
      by any notice to the contrary.
    

    
      EXHIBIT 4.4(a)
(To Note Purchase Agreement)
    

    
      
        

        

      

      
        

        

        
          


        

      

      
        

        

      

    

    
      The Company will make required prepayments of principal on the dates and
      in the amounts specified in the Note Purchase Agreement.  This Note is
      also subject to optional prepayment, in whole or from time to time in
      part, at the times and on the terms specified in the Note Purchase
      Agreement, but not otherwise.
    

    
      If an Event of Default occurs and is continuing, the principal of this
      Note may be declared or otherwise become due and payable in the manner,
      at the price (including any applicable Make-Whole Amount) and with the
      effect provided in the Note Purchase Agreement.
    

    
      This Note shall be construed and enforced in accordance with, and the
      rights of the Company and the holder of this Note shall be governed by,
      the law of the State of New York excluding choice-of-law principles of
      the law of such State that would permit the application of the laws of a
      jurisdiction other than such State.
    

    
    	
           
        	
          CULP, INC.
        
	

        	
          By
        	
           
        
	

        	

        	
          Name:
        
	

        	

        	
          Title: